Wednesday’s Vital Data: Bank of America Corp (BAC), Facebook Inc (FB) and Barrick Gold Corporation (USA) (ABX)

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U.S. stock futures are pointed slightly higher this morning ahead of employment data that could set the tone for an interest rate hike in the last two months of the year.

Wednesday’s Vital Data: Bank of America Corp (BAC), Facebook Inc (FB) and Barrick Gold Corporation (USA) (ABX)The ADP employment report is due out later this morning, and Wall Street will be keeping close tabs on the data for clues to what to expect from Friday’s September jobs report. Strong jobs data could mean an interest rate hike from the Federal Reserve in either November or December.

Against this backdrop, futures on the Dow Jones Industrial Average have risen 0.22%, while S&P 500 futures have gained 0.21% and Nasdaq-100 futures have edged 0.16% higher.

Tuesday’s options activity rebounded from Monday’s below average performance. Overall, 14.8 million calls and 13.3 million puts changing hands on the session. On the CBOE, the single-session equity put/call volume ratio fell to a one-month low of 0.51, while the 10-day moving average ticked lower to 0.64.

Driving Tuesday’s options volume, Bank of America Corp (NYSE:BAC) call traders were out in force ahead of the jobs data, with many anticipating a rake hike from the Fed. Along the same lines, Barrick Gold Corporation (USA) (NYSE:ABX) options were active as precious metals dropped sharply on a rise in the U.S. dollar, which rallied on increased expectations for a rate hike. Finally, Facebook Inc (NASDAQ:FB) has shied away from the headlines recently, though news of a massive data center in Denmark may have sparked some additional call activity on Tuesday.

Wednesday’s Vital Data: Bank of America Corp (BAC), Facebook Inc (FB) and Barrick Gold Corporation (USA) (ABX)

Bank of America Corp. (BAC)

With insight on a the potential for a rate hike from the Federal Reserve as soon as next month, Bank of America options traders piled into BAC calls on Tuesday. Richmond Federal Reserve President Jeffery Lacker has even called for a pre-emptive rate hike. Higher interest rates mean a stronger bottom line for BofA’s investment unit, and BAC bulls are looking to get in early.

Overall volume jumped to more than 900,000 contracts on BAC — well above the stock’s daily average. Furthermore, calls accounted for a whopping 79% of the day’s take. Checking in with data from Trade-Alert.com reveals a rather large call spread that appears to be keying off this Friday’s jobs data.

Specifically, it appears that a trader opened a weekly October 7 series $15.50/$16 call spread. Late in Tuesday’s session, a block of 77,456 BAC calls traded on the $16 strike for the bid of 12 cents, or $12 per contract, while a block of 77,456 calls simultaneously traded on the $15.50 strike for the ask of 41 cents, or $41 per contract.

The total outlay for the position was 29 cents, or $29 per pair of contracts.

Barrick Gold Corporation (USA) (ABX)

Precious metals were hit hard by a modest bump in the U.S. dollar, which rallied on the prospect of higher interest rates. Most notably, silver fell 5.1% while gold shed 3.2%. It was enough to send ABX stock down more than 11% on the day. Lacker again provided the biggest driver on the day when he argued that interest rates should already be at 1.5% while calling for a pre-emptive rate hike.

Surprisingly, ABX saw an unusual rise in call options following the news and the stock’s decline. Total volume came in at more than 300,000 contracts, with calls snapping up 64% of the day’s take. In fact, short-term speculators have been extremely call heavy lately for ABX. The stock’s weekly October 7 series put/call open interest rate has fallen to a reading of 0.38 this week, with calls on the verge of tripling their put counterparts.

Currently, peak call OI for the weekly October 7 series totals 3,871 contracts at the overhead $18.50 strike, while another 3,700 contracts are open at the $18 and $16 strikes.

Facebook Inc (FB)

It’s been a relatively quiet week for Facebook, which saw a flurry of analyst activity last week surrounding the company’s ad sales projections. This week, the company made the headlines after news broke that Facebook may be building a massive new data center in Denmark. According to local news media, Facebook is looking to build a data center with three server halls near Odense — Denmark’s third largest city.

Options activity was below par for FB on Tuesday, though it was still more than enough to put the shares on the day’s top ten most active options listing. Some 288,000 contracts crossed the tape on FB, with calls snapping up an above-average 66% of the day’s take.

Overall, calls are the options of choice for speculative traders through the end of 2016, with FB’s October/November/December put/call OI ratio arriving at 0.63 for the series.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/10/wednesdays-vital-data-bank-america-corp-bac-facebook-inc-fb-barrick-gold-corporation-usa-abx/.

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