U.S. stock futures are sharply higher once again this morning, as Wall Street debates the impact of a Donald Trump presidency. Banking stocks, especially, Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE:C) and Wells Fargo & Co (NYSE:WFC) surged on speculation that Trump would loosen regulations and put pressure on the Federal Reserve. Tech stocks, like Apple Inc. (NASDAQ:AAPL), however, are struggling due to perceived staffing concerns from Trump’s immigration policies.
Against this backdrop, futures on the Dow Jones Industrial Average have vaulted 0.52% higher, while S&P 500 futures are up 0.46% and Nasdaq-100 futures have gained 0.58%.
Over in the options pits, volume hit a near-term high as calls reclaimed the lead. In total, 24.1 million calls and 23.6 million puts crossed the tape on Wednesday. Over on the CBOE, the single-session equity put/call volume ratio retreated sharply to 0.61, pulling the 10-day moving average off its recent highs to settle at 0.74.
Driving Wednesday’s options volume, Bank of America was hit with a flood of call volume as the stock neared key resistance near $18 amid speculation for looser banking regulations. Meanwhile, Apple saw call volume bounce back, but immigration and staffing concerns have compounded growing worries that a Trump presidency could impact Chinese imported goods. Finally, Pfizer Inc. (NYSE:PFE) call volume hit a near-term high on reports the company was looking to spin off or sell its consumer health goods business.
Bank of America Corp. (BAC)
A Trump win was supposed to be bad for banks, with monetary policy uncertainty the main driver. However, Bank of America and other banking stocks — including Citigroup, Wells Fargo and JPMorgan Chase & Co. (NYSE:JPM) — surged on hopes that Trump would not only put pressure on the Fed to raise rates but also loosen federal banking regulations.
Being the poster child for the banking sector, BAC stock received the brunt of this bullish speculation on Wednesday. Total volume screamed higher to 2.4 million contracts — a level only typically only seen ahead of ex-dividend. Similarly, calls accounted for a whopping 76% of yesterday’s volume, as traders bet on a continued rally for BAC stock.
Looking out at the rest of 2016, there is still a bit of trepidation for BAC’s prospects. Specifically, the total November/December put/call open interest ratio has slipped slightly, but still rests at an elevated reading of 0.94 as traders remain cautious head of Trump taking the reins.
Apple Inc. (AAPL)
One would think that Trump’s pledge to help companies bring their overseas hoards of cash home would greatly benefit companies like Apple. The tech giant has billions stashed overseas, and it could use that cash for buybacks and dividends without having to take out more debt to avoid tax penalties. However, AAPL stock traders appear more concerned with Trump’s policies toward China, a growing market for Apple, and his immigration policies, which could hurt recruitment in the tech sector.
As a result, AAPL shares dipped a tenth of a point yesterday, failing to join in the massive Wall Street rally. Even options traders were showing signs of concern on Wednesday. Total volume soared to 1.2 million contracts, but calls only accounted for 59% of the day’s take — well below normal for Apple stock.
Heading into the end of 2016, the November/December put/call open interest ratio for AAPL rests at 0.91, indicating a heightened level of concern for the shares as puts and calls are near parity.
Pfizer Inc. (PFE)
Outside of the Trump fallout on Wall Street, Pfizer stock surged more than 7% on news that the company is looking to spin-off or sell its consumer health division — which includes popular names like Chapstick and Advil. Talks are in the early stages, and Pfizer has declined to comment on the report.
A lack of details has never stopped options traders from speculating, however, and PFE stock was at the center of a call option firestorm on Wednesday. Total volume swelled to 347,000 contracts, with calls snapping up 74% of the day’s take.
That said, short-term traders remain heavily bearish on PFE, as the November put/call open interest ratio has ballooned to a perch at 1.24, with puts easily outnumbering calls among options set to expire before the end of the month.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
