U.S. stock futures are trading cautiously higher this morning, as Wall Street searches for directly early in this Thanksgiving holiday shortened week. There are no major economic reports slated for release today — the bulk of those will arrive on Wednesday — leading traders to focus on a speech from Federal Reserve Vice Chair Stanley Fischer later today.
Against this thin backdrop, Dow Jones Industrial Average futures have eked out a gain of 0.06%, with S&P 500 futures up 0.19% and Nasdaq-100 futures adding 0.23%.
On the options front, volume continued to fall on Friday, despite November options expiration. Overall, 17.6 million calls and 16.6 million puts crossed the tape on Friday. Over on the CBOE, the single-session equity put/call volume ratio rose to a one-week high of 0.68, but the 10-day moving average extended its decline to hit a three-month low of 0.62.
Among Friday’s volume leaders, Apple Inc. (NASDAQ:AAPL) call volume is on the rise again ahead of Black Friday and next month’s release of Nintendo’s (OTCMKTS:NTDOY) “Super Mario Run” title on the App Store. Elsewhere, the online streaming video war between Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX) is about to heat up, with Amazon looking to launch Prime Video globally.
Apple Inc. (AAPL)
AAPL stock appears to have finally hit a near-term bottom last Monday, with the shares tentatively rallying off support near $105. Driven by hopes for strong Black Friday sales figures, AAPL shares have even managed to retake former support at $110 — a key psychological hurdle for the stock.
What’s more, Apple could receive another shot in the arm in early December, when Nintendo finally launches “Super Mario Run” on the App Store. Nintendo announced the launch in September, prompting a sharp rally from AAPL stock on the news.
AAPL stock options traders have been reluctant to dive into calls lately, as the tech sector struggles with the potential impact of a Donald Trump presidency. But call traders are slowly starting to trickle back into Apple, as evidenced by Friday’s action, where calls snapped up 58% of the more than 971,000 contracts traded on AAPL.
Short-term traders remain reserved, however, as Black Friday options expiration shows peak call open interest totaling only about 22,000 contracts at the currently at-the-money $110 strike. What’s more, there is very little in the way of additional call accumulations above AAPL, indication low expectations for a Thanksgiving week rally for the stock.
Amazon.com, Inc. (AMZN)
AMZN stock could have a banner week heading into Black Friday. In addition to expectations for strong online sales, Amazon is ratcheting up the stakes in its online streaming war with Netflix. Specifically, The Wall Street Journal reported that Amazon is expanding its Prime Video service to about 200 countries and territories, blowing past Netflix’s current reach. While Amazon did not comment on the report, Jeremy Clarkson of Amazon’s “The Grand Tour” automotive comedy show hinted at a confirmation of the rumors on Wednesday.
Options traders remained largely nonplussed over the news. Volume ticked sharply higher to 310,000 contracts, but call activity only accounted for about 53% of Friday’s total volume.
Looking at Black Friday expectations, peak call OI for the weekly Nov 25 series totals just 2,069 contracts at the just overhead $770 strike. By comparison, peak put OI for the series numbers 2,300 contracts at the $745 strike, as options traders express caution ahead of the biggest shopping day of the year.
Netflix, Inc. (NFLX)
NFLX stock is also attempting to bounce back from the Trump tech dip. The shares have edged higher off last week’s test of support near $105, but resistance looms large overhead at $110. NFLX faces some considerable headwinds going forward, especially on the increased competition front from Amazon.com’s streaming video service — which is currently a dollar cheaper per month and includes a wealth of other perks, including free Prime shipping.
NFLX options traders are shrugging off these concerns lately, however, emboldened by the fact that the stock is finally showing some signs of life post-Trump election. Volume on Friday rose to 251,000 contracts, with calls accounting for 66% of the day’s take.
While there may be some merit to jumping back on the NFLX bandwagon heading into the end of the year, volatility remains a concern for investors. In fact, Dec 15 series option implieds are pricing in a potential move of nearly 7% for NFXL stock through expiration, putting the upper bound at $122.96 and the lower bound at $107.04.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
