U.S. stock futures are headed this morning as November comes to a close. Wall Street will be positioning for gains in this last trading day of the month, with a potential OPEC production deal providing a tailwind. Traders will also be confronted by a wealth of economic reports, including ADP’s November jobs report, October personal income, November Chicago business conditions, October pending home sales and the Fed Beige Book.
With Wall Street in a bullish mood this morning, futures on the Dow Jones Industrial Average have added 0.21%, S&P 500 futures are up 0.23% and Nasdaq-100 futures are lagging with a gain of 0.01%.
On the options front, volume continued to tick higher on Tuesday, with about 13.7 million calls and 11.5 million puts changing hands on the session. Expect today’s volume to be even more brisk due to end-of-the-month activity. Over on the CBOE, the single-session equity put/call volume ratio rose to 0.62, while the 10-day moving average finally ticked higher, arriving at 0.61 after spending four consecutive sessions in four-month low territory.
Among Tuesday’s volume leaders, Facebook Inc (NASDAQ:FB) launched a series of games in Messenger and its news feed in a bid to keep users on the site longer. Meanwhile, both Micron Technology, Inc. (NASDAQ:MU) and Comcast Corporation (NASDAQ:CMCSA) were hit with price-target bumps.
Facebook Inc (FB)
Social media giant Facebook has launched a bid to keep users engaged in Messenger and its news feed — in a likely push for increased ad revenue. The initiative is called “Instant Games,” and it allows users to play roughly 17 titles, including popular names like Pac-Man, in both the FB chat app and right in the Facebook news feed. The games work on both mobile and web without the need for additional apps.
Facebook’s Instant Games may have added a bit of a bullish bias to yesterday’s options activity — or it may have been the stock’s rebound from support near $120, which is a crucial support level for the stock. Either way, more than 354,000 FB contracts traded yesterday, with calls accounting for 64% of the day’s take.
That said, Facebook stock will need a bit more call action from speculative traders before the options sentiment picture returns to normal. Specifically, the December total put/call open interest ratio still lies at an elevated reading of 0.89, indicating a high level of put OI relative to calls. For the monthly Dec 16 series, the $120 strike has become a focal point, attracting more than 32,000 calls and 19,000 puts.
Micron Technology, Inc. (MU)
Micron Technology saw an influx of call option activity after Deutsche Bank raised its price target on MU stock to $24 from $20, reiterated its “buy” rating and boosted its earnings outlook for the company. According to Deutsche Bank, Micron sees continued strong pricing for DRAM despite supplies building heading into the holiday season.
Tuesday’s volume was strong on MU stock, coming in at more than 272,000 contracts. What’s more, calls accounted for a hefty 71% of the day’s take — well above the norm for MU. That said, options traders are showing some signs of concern for MU stock, as the shares look to overtake key overhead resistance at $20.
Put OI is building at the out-of-the-money Dec $16 and $17 strike — more than 10,000 contracts each — while call traders are nearly all in at the $20 strike, with more than 73,000 contracts open here in the Dec 16 series.
Comcast Corporation (CMCSA)
Looking at Comcast’s options activity on Tuesday, you would think the stock was set to trade ex-dividend today. But the company’s next ex-div date isn’t until Dec. 30. Instead, CMCSA stock options traders appear to be reacting to both Jim Cramer’s bullish comments on the shares and Wunderlich’s CMCSA price-target increase to $85 from $78. Both Cramer and Wunderlich cited strength for Comcast, even if the Trump rally dies down, with the brokerage firm calling CMCSA a “safe haven” in such an event.
Options traders took those bullish comments to heart, with calls accounting for a whopping 91% of the roughly 182,000 contracts traded on Tuesday. Recent bullish options activity has pushed CMCSA’s December put/call OI ratio down from a reading north of 1 to its current perch just south of parity at 0.97.
What’s more, the most popular Dec 16 series contract is now the $72.50 strike, where more than 10,000 calls currently reside as traders look for an extended rally from CMCSA stock.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
