U.S. stock futures were mixed over the weekend, as Wall Street continued to digest the September employment report. Nonfarm payrolls added 156,000, while the unemployment rate ticked higher to 5% — nowhere near strong enough to support hawkish Federal Reserve interest-rate commentary, but not weak enough to inspire economic concern.
It was a fine line to walk, and stocks appear to be walking that line once again this morning.
Against this backdrop, futures on the Dow Jones Industrial Average have risen 0.13%, while S&P 500 futures were down 0.03% and Nasdaq-100 futures are up 0.12%.
Friday’s options activity offered up a return to the norm in terms of overall volume, but puts were clearly in control on the session. Specifically, 13.8 million calls were dwarfed by the 14.2 million puts that changed hands on Friday.
Negativity was largely absent from the CBOE, however, as the single-session equity put/call volume ratio pulled back to 0.68 from Thursday’s two-week, while the 10-day moving average ticked higher once again to 0.65.
Heading up Friday’s pre-weekend speculative trading, Apple Inc. (NASDAQ:AAPL) options were popular following a smattering of bullish reports, including a “buy” reiteration and more positive iPhone news from a chips supplier. Meanwhile, Netflix, Inc.’s (NASDAQ:NFLX) CEO Reed Hastings said entering the Chinese market “doesn’t look good,” and Amazon.com, Inc. (NASDAQ:AMZN) is expected to garner $1 billion in ad revenue in 2017.
Apple Inc. (AAPL)
AAPL stock managed to ditch most of the malaise that spread throughout Wall Street on Friday.
The stock was bolstered by a “buy” reiteration and a $185 price target from Drexel Hamilton, which called the recent quarter Apple’s best yet. Additionally, German chips maker and iPhone 7 parts supplier Dialog Semiconductor reported higher-than-expected quarterly revenue, adding fuel to the fire for iPhone 7 demand sentiment.
Speaking of sentiment, options traders remain strongly biased toward AAPL calls. On Friday, the stock saw more than 802,000 contracts change hands, with calls snapping up 62% of the day’s take. The $115 strike is the level to watch this week for AAPL call traders, as it is home to peak OI in the weekly October 14 series totaling 11,035 contracts. Overall, the weekly October 14 put/call OI ratio rests at 0.56 for AAPL, indicating that calls nearly double puts in this highly speculative series.
Netflix, Inc. (NFLX)
NFLX stock has some of the air taken out of its sails on Friday after CEO Reed Hastings said the prospect of Netflix entering the Chinese market didn’t look good. Netflix had been riding high on speculation that Walt Disney Co (NYSE:DIS) would make a buyout offer for NFLX. An offer has yet to materialize. Returning to China, Hastings had this to say:
“Disney, who is very good in China, had their movie service shut down. Apple, who is very good in China, had their movie service closed down. It doesn’t look good.”
In addition to NFLX slipping about a quarter of a point on Friday, options traders also backed away from calls. Volume came in north of 305,000 contracts on Friday, well above the norm for NFLX, while calls only managed to eke out 58% of the day’s take — down sharply from recent highs due to DIS takeover speculation.
In fact, recent call activity has driven Netflix’s October put/call open interest ratio below its three-month average north of 1.00 to a perch at 0.9 as of Friday. This week, options traders have their sights set on the $110 strike, where more than 4,500 call contracts are open in the weekly October 14 series.
Amazon.com, Inc. (AMZN)
When you think about Amazon.com, you typically think about online sales or streaming movies and TV shows from Prime. What you don’t think about is AMZN’s thriving ad business.
But that ad business is expected to top $1 billion in 2017, according to market research firm eMarketer — a figure that analysts at RBC Capital Markets called “a good number.”
AMZN has been on quite a tear this year, and it has reinvigorated bullish options activity in the shares. On Friday, Amazon saw more than 242,000 contracts cross the tape, with calls accounting for 56% of the day’s take. That said, there is still room for improvement in the sentiment department, as AMZN’s October put/call OI ratio arrives at 0.93, with calls and puts in near parity among short-term speculators.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
