U.S. stock futures are struggling to hold onto all-time-high territory this morning, as Wall Street heads for the exits ahead of the Thanksgiving holiday. Light volume and profit taking appear to be in store for the major market indices … that is, unless today’s economic data offers up any surprises.
Today’s docket includes weekly jobless claims, October durable goods orders, the preliminary November Markit manufacturing purchasing managers index, October new-home sales, November consumer sentiment and the FOMC minutes from the November meeting.
Against this backdrop, futures on the Dow Jones Industrial Average are up 0.05%, with S&P 500 futures down 0.01% and Nasdaq-100 futures shedding 0.04%.
On the options front, volume is holding steady just below average for the past three weeks. Overall, 15.7 million calls and 14.1 million puts crossed the tape on Tuesday. Over on the CBOE, the single-session equity put/call volume ratio rallied back to 0.63, while the 10-day moving average held at a three-month low of 0.60.
Among Tuesday’s volume leaders, Bank of America Corp (NYSE:BAC) options traders are gearing up for next month’s Federal Open Market Committee (FOMC) meeting and assumed interest rate hike, as well as next Wednesday’s ex-dividend date. Elsewhere, Apple Inc. (NASDAQ:AAPL) announced it is holding a Black Friday sales event, while investors speculate that Trump appointments could push through the AT&T Inc. (NYSE:T) acquisition of Time Warner Inc (NYSE:TWX) despite the president-elect’s expressed opposition to the deal.
Bank of America Corp. (BAC)
When it comes down to it, the bulk of yesterday’s call options activity on BAC stock is likely related to next Wednesday’s ex-dividend date. Overall, some 833,000 contracts traded on BAC, with calls snapping up a hefty 70% of the day’s take. Quite a bit of this activity appear to have taken place at the December and January $20 and $20.50 strikes.
As for Bank of America dividends, shareholders of record as of the close on Nov. 30 will be eligible for a $0.075 per share dividend, payable on Dec. 30, and many options traders are looking to enter dividend capture strategies ahead of the Thanksgiving holiday.
That said, expect speculation to continue to ramp up for BAC stock heading into next month’s FOMC meeting, with options traders betting on a rate hike from the Fed.
Apple Inc. (AAPL)
Apple has long been adamant about maintaining the high margins on its popular products, which is why it comes as a shock that the company announced its first-ever Black Friday sales event. Details on the event are slim, with Apple only stating, “Our one-day shopping event will be here before you know it. Come back this Friday to check everyone off your list.” The last time Apple held such an event was in 2014, when it offered free iTunes gift cards.
Given Apple’s history of avoiding such events, the move smells a bit of desperation for improved sales figures. Options traders appear to have picked up the scent, as call volume fell sharply on Tuesday, with the bullish bets only accounting for 59% of the 539,000 contracts traded on AAPL stock — down from its three-week average of 63%.
Still, AAPL stock has cracked resistance at $110, with only $115 and its 50-day moving average left as short-term hurdles. A solid Black Friday sales day could give the stock a short-term shot in the arm.
AT&T Inc. (T)
Both Hillary Clinton and Donald Trump made it known that they opposed the AT&T/Time Warner deal shortly after the acquisition was announced in October. So, for T stockholders, Trump winning the election didn’t make too much of a difference.
Now, however, Trump has appointed several key people that could help push the deal forward, despite his former opposition. Among those appointments, Jeff Eisenach, who will head up the FCC transition, and Mark Jamison, a former Sprint lobbyist, both supported AT&T’s move to buy T-Mobile US Inc. (NASDAQ:TMUS) back in 2011.
T stock options traders are beginning to sense that the situation is shifting in AT&T’s favor. Call volume has been on the rise for T lately, culminating in a surge of 309,000 total contracts on Tuesday, where calls accounted for 56% of the day’s take.
That said, sentiment has a long way to go, with the total November/December put/call open interest ratio for T stock rests at 0.96, with puts and calls in near parity. Look for this ratio to plunge sharply on any positive news on the TWX buyout front.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
