U.S. stock futures are looking to recover from yesterday’s losses, even as Wall Street eyes falling oil prices. The International Energy Agency cut its global oil demand forecast for next year, citing a poor economic outlook. As a result, oil futures are off 0.15% at $41.62 per barrel.
Despite weak oil, futures on the Dow Jones Industrial Average have added 0.29%, S&P 500 futures are up 0.22% and Nasdaq-100 futures have gained 0.28%.
Options activity leveled out on Wednesday, with 11.7 million calls and 11.4 million puts changing hands on the day. Put activity remains on the rise, however, even on the typically call-heavy CBOE, where the single-session equity put/call volume ratio rose to 0.62. The 10-day moving average held at 0.63.
Driving yesterday’s equity options activity, Apple Inc. (NASDAQ:AAPL) saw increased options activity amid confirmation of MacBook changes in 2016 and the iPhone 7 announcement date. Meanwhile, Alibaba Group Holding Ltd (NYSE:BABA) call options activity spiked on Wednesday heading into its quarterly report. Finally, Kohl’s Corporation (NYSE:KSS) was hit with heavy put volume ahead of this morning’s better-than-expected quarterly earnings report.
Apple Inc. (AAPL)
AAPL stock is creeping closer to a confrontation with technical and options related resistance at $110. Confirmation of rumors that the 2016 redesigned MacBook is happening helped drive speculation, in addition to the confirmation of a Sept. 7 announcement date for the iPhone 7. As for the MacBook, speculation continues on whether the device will have a touchscreen and if the laptop will use A10 processor chips.
Despite the rise in overall volume for AAPL options, traders remained mixed on the stock yesterday. Total volume swelled to 646,000 contracts on the session, though activity was split nearly evenly between puts and calls. In addition to technical resistance at $110, there are nearly 17,000 weekly August 12 series calls open at the strike, as well as roughly 48,000 monthly August 19 series calls open here. Baring a broad-market windfall, AAPL could have trouble taking out this hurdle over the short-term.
Alibaba Group Holding Ltd (BABA)
Bulls appear to be betting big on BABA stock, as the shares rallied 2.4% yesterday and were up more than 4.8% in premarket trading this morning. Traders were speculating heavily ahead of its quarterly report, where Alibaba beat on both the top and bottom lines — earnings of 74 cents easily outstripped the expectation for 63 cents, and revenue of $4.84 billion surpassed calls for $4.61 billion.
BABA option volume was brisk on Wednesday, with the 653,000 contracts traded, even outpacing AAPL on the session. Calls were the vehicle of choice, accounting for 65% of the day’s take. Weekly August 12 series implieds are pricing in a potential post earnings move of more than 4.2% for BABA stock, with a rally putting the shares well into annual high territory, while a decline should be contained by the stock’s 10-day and 20-day moving averages in the $84 region.
Kohl’s Corporation (KSS)
KSS stock options traders placed some rather large bets against the shares yesterday, but it seems their pessimism was misplaced. Kohl’s stock is up more than 9% heading into the open, after the company blew past Wall Street’s quarterly expectations. By the numbers, Kohl’s said it earned $1.22 per share in the second quarter, leaving Wall Street’s expectations for $1.03 per share in the dust. Revenue arrived at $4.18 billion, edging out the consensus estimate for $4.16 billion.
Heading into the report, nearly 250,000 contracts traded on KSS in the options pits. Puts were extremely popular, accounting for 78% of the day’s take.
Unless these were married puts designed as protection for a long KSS stock position, these bears are going to get burned on the open this morning.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
