U.S. stock futures are headed lower this morning, as Wall Street was less than enthused with the latest round of corporate earnings from several blue-chips, including Pfizer Inc. (NYSE:PFE) and Procter & Gamble Co (NYSE:PG). Additionally, investors are waiting on several key economic reports this morning, with June readings on personal income, consumer spending and core inflation slated for release.
Against this backdrop, futures on the Dow Jones Industrial Average have fallen 0.21%, S&P 500 futures have shed 0.29% and Nasdaq-100 futures are down 0.24%.
Options activity evaporated on Monday, with only about 12.3 million calls and 12.3 million puts changing hands on the day.
Meanwhile, the Chicago Board Options Exchange single-session equity put/call volume ratio rose to a four-week high of 0.72, while the 10-day moving average ended a six-session advance to hold at 0.65.
In equity option news, after receiving a wealth of praise from the brokerage community last week, Facebook Inc (NASDAQ:FB) was upgraded once again on Monday at MKM Partners. Meanwhile, Netflix, Inc. (NASDAQ:NFLX) was downgraded at Vetr Inc., and Pfizer drew heavy call volume heading into this morning’s second-quarter earnings report.
Facebook Inc (FB)
Facebook has had analysts drooling all over the shares since last week’s blowout second-quarter earnings report. On Monday, FB stock was boosted again, this time by MKM Partners, which reiterated a “buy” rating on FB while lifting its price target to $165 from $155. MKM said that Facebook’s earnings were “stellar,” and that there is ample room for growth in monetizing Instagram.
FB was the second most popular equity among options traders on Monday, with more than 470,000 contracts changing hands on the stock. What’s more, there was a bullish edge to the activity, as calls made up 57% of the day’s take. Unfortunately, for FB bulls, technical resistance at $125 is being reinforced by options related resistance at the $125 strike.
Specifically, there are nearly 13,000 contracts open at the August 5 series $125 strike, with another 19,000 open at the August 19 series $125 strike. Combined with technical resistance, these overhead calls could create headwinds for FB stock going forward.
Netflix, Inc. (NFLX)
NFLX stock was also on the receiving end of recent brokerage action, with Vetr Inc. downgrading the shares to “buy” from “strong buy.” Vetr held its price target at $102.41. According to data from Thomson/First Call, 22 of the 41 analysts following NFLX rate the shares a “buy,” down from 24 last month. The 12-month consensus price target comes in at $1095.08.
Options traders seemed content to ride NFLX’s Monday rally, as the shares gained nearly 3.5%. Overall, roughly 333,000 contracts crossed the tape on NFLX, with calls accounting for 64% of the day’s take. That said, near-term options traders haven’t been all that enthused about NFLX recently, with the stock’s August put/call open interest ratio resting at 0.89 — with puts and calls nearing parity among options with less than a month until expiration.
Pfizer Inc. (PFE)
Ahead of the open this morning, blue-chip drug tsar Pfizer said it earned 64 cents per share in the second quarter, on revenue of $13.15 billion. The consensus was looking for a profit of 62 cents per share on revenue of $13.01 billion. Pfizer also reiterated its full-year outlook for revenue of $51 billion to $53 billion and earnings of $2.38 to $2.48 per share.
Heading into the report, options traders were looking for a positive reaction in PFE stock. Specifically, call volume ramped up on PFE, accounting for 71% of the 315,000 contracts traded on the stock. However, PFE is down 1.5% at $36.75 in premarket trading, pinning the shares between 7,600 calls at the weekly August 5 series $37 strike and 7,150 puts at the $36.50 strike in the same series. In other words, don’t expect PFE to break out of its weeks-long trading range due to this morning’s earnings report.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
