U.S. stock futures are hovering right around breakeven this morning, as Wall Street frets over falling oil prices amid a global glut of supply. The American Petroleum Institute reported a 14.2 million barrel rise in global stockpiles yesterday, and the Energy Information Administration will release its weekly figures later this morning. At last check, crude oil futures were of 0.67% at $51.82 per barrel.
Against this backdrop, futures on the Dow Jones Industrial Average have dropped 0.1%, with S&P 500 futures also lost 0.1% and Nasdaq-100 futures are flat.
On the options front, volume returned to normal on Tuesday, with about 13.2 million calls and 13.1 million puts changing hands. Over on the CBOE, the single-session equity put/call volume ratio dipped to 0.70, but the 10-day moving average crept higher to a three-month high of 0.70.
Turning to Tuesday’s volume leaders, Facebook Inc (NASDAQ:FB) saw renewed call option interest after RBC Capital and MKM Partners issued bullish research notes. Meanwhile, Walt Disney Co (NYSE:DIS) saw mixed options activity following its first-quarter earnings report and Boeing Co (NYSE:BA) was on the hook for dividend capture plays ahead of today’s ex-dividend action.
Facebook Inc (FB)
The brokerage community was out in defense of FB stock yesterday. RBC Capital reiterated its “outperform” rating and boosted its price target to $175 from $170 on what analyst Mark Mahaney called Facebook’s “wicked strong” fourth-quarter results. Meanwhile, MKM Partners told investors that they should buy any post-earnings weakness in FB stock, noting that Facebook’s “valuation collapse is premature.”
While call volume has come down considerably from its pre-earnings highs, FB stock options traders remain largely bullish on the shares. In Tuesday’s trading, some 365,000 contracts traded on FB, with calls accounting for 58% of the day’s take — down from the 71%-73% range ahead of earnings, but up from the recent trend toward 51% of total volume since the report.
Looking out to Feb options, FB traders have set their sights on the $135 and $140 strikes, with open interest arriving at 26,000 and 32,000 contracts, respectively. FB stock eclipsed $135 late last week before retreating to support near $130. Clearly, FB options traders are expecting a move higher, though a longer consolidation period may be needed.
Walt Disney Co (DIS)
If Walt Disney’s quarterly report told investors anything, it’s that the Mouse’s House remains in disarray. Earnings came in at $1.55 per share on revenue of $14.78 billion, compared to expectations for $1.49 per share on sales of $15.3 billion.
Year-over-year comparisons were tough, given that the year-prior saw blockbuster Star Wars: The Force Awakens rake in $2 billion for Disney. However, ESPN remains an albatross around Disney’s neck, as it was almost entirely to blame for an 11% drop in the company’s cable operating income.
DIS stock options traders were nonplussed heading into the event, as calls only eked out 54% of the more than 313,000 contracts traded on the shares. That said, the overall opinion among options traders remains bullish for DIS.
Currently, the February/March put/call OI ratio rests at 0.58, with calls nearly doubling puts among options set to expire within the next two months. The March $115 strike is by far the most popular among DIS bulls, attracting nearly 28,000 contracts.
Boeing Co (BA)
Boeing stock made a rare appearance on the top ten most active options listing on Tuesday, with dividend capture strategies likely driving the bulk of yesterday’s volume. BA stock trades ex-dividend today, with stockholders of record as of the close last night eligible for a quarterly dividend of $1.42 per share to be paid on March 3.
Overall, 244,000 contracts traded on BA, with calls gobbling up 96% of the day’s take. Given that calls are a favorite for dividend capture strategies, it’s a safe bet that most of this activity was related.
But BA stock has been a hot topic for options traders outside of yesterday’s dividend related activity. The shares recently hit an all-time high of $170 following a solid quarterly earnings report, and could be headed higher once again after profit taking runs its course.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
