Tuesday’s Vital Data: Bank of America Corp (BAC), Netflix, Inc. (NFLX) and Alibaba Group Holding Ltd (BABA)

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U.S. stock futures are pointed broadly lower this morning as Wall Street continues to be pulled lower by geopolitical tensions amid a growing flood of earnings reports. You can throw the French elections into the mix with Russia and North Korea, with many analysts fearing the outcome in France could dictate the future of the E.U. Meanwhile, Bank of America Corp (NYSE:BAC), UnitedHealth Group Inc (NYSE:UNH) and Goldman Sachs Group Inc (NYSE:GS) head up today’s earnings reports.

Tuesday’s Vital Data: Bank of America Corp (BAC), Netflix, Inc. (NFLX) and Alibaba Group Holding Ltd (BABA)

Against this cluttered backdrop, futures on the Dow Jones Industrial Average have dropped 0.13%, with S&P 500 futures down 0.29% and Nasdaq-100 futures off 0.24%.

On the options front, volume was anemic on Monday following a rush for portfolio protection last Thursday. Only about 11.8 million calls and 10.7 million puts changed hands yesterday. After smacking a cautious ten-month high of 0.96 ahead of the holiday weekend, the Chicago Board Options Exchange single-session equity put/call volume ratio plummeted back to earth on Monday, arriving at 0.63 for the session. The 10-day moving average, however, held at its two-month high of 0.69.

Driving Monday’s options volume, Bank of America saw heavy call volume ahead of this morning’s quarterly earnings report, and the immediate pre-market reaction to BAC’s numbers looks encouraging. Elsewhere, Netflix, Inc. (NASDAQ:NFLX) saw mixed activity following its trip to the earnings confessional and Alibaba Group Holding Ltd (NYSE:BABA) continues to battle for the right to acquire Moneygram International Inc (NYSE:MGI).

Tuesday’s Vital Options Data: Bank of America Corp. (BAC), Netflix, Inc. (NFLX) and Alibaba Group Holding Ltd (BABA)

Bank of America Corp (BAC)

BAC stock is slumping this morning despite the fact the banking giant said it earned 41 cents per share versus expectations for a profit of 35 cents per share. Revenue came in at $22.45 billion, also topping expectations for $21.61 billion. That said, loan revenue is showing signs of weakness amid rising interest rates, while investment revenue is on the rise for the same reason.

Options traders were extremely bullish heading into the event, with calls making up 73% of the more than 1.38 million contracts traded on BAC stock. Shares rose above $23 at the open, north of peak put and call open interest at the April $23 strike, before dipping. Even if it recovered, BAC would need to put some distance between it and the $23 strike in order to keep from getting pinned at the strike come Friday’s expiration.

Netflix, Inc. (NFLX)

Netflix wowed investors yesterday by posting a 516% year-over-year surge in earnings to 40 cents per share, beating Wall Street’s expectations of 37 cents. However, the rest of the numbers weren’t so encouraging. Revenue rose 34.7% year-over-year to $2.64 billion, but missed analyst expectations for $2.65 billion, and both domestic and international subscriber numbers came up short.

While NFLX stock rose more than 3% on the day, options traders were far from enthusiastic. Volume topped out at 578,000 contracts, with calls only eking out 44% of the day’s take. The company’s stock also remains well below peak front-month call OI of 12,200 contracts at the $150 strike, hinting that expectations were considerably elevated heading into the company’s quarterly report.

With little in the way of follow through buying on the immediate horizon, NFLX could be set to remain rangebound between $145 and $150 for the immediate future. Today’s 2% dip seems to nod at that idea.

Alibaba Group Holding Ltd (BABA)

Alibaba’s financial arm Ant Financial Services is interested in buying U.S.-based money transfer services firm Moneygram. So interested, in fact, that the company recently upped its bid for MGI to $1.2 billion, beating out Euronet Worldwide’s competing offer of $955 million. Euronet has recently engaged in an intense lobbying campaign for MGI, telling U.S. lawmakers and the U.S. Treasury that Ant’s acquisition of Moneygram represents privacy and national security risks from China.

Should the deal go through, it could be a major coup for Alibaba, which is looking to gain leverage for its Alipay services in the States.

BABA options traders are having a field day with speculation surrounding the battle, with many appearing to bet that the company will win approval. Volume swelled to more than 178,000 contracts on Monday, with calls snapping up 78% of the day’s take.

Peak May call OI currently totals about 37,000 contracts at the $110 strike, but some 22,000 contracts are also open at $115 and another 16,000 reside at $120, indicating elevated bullish expectations for BABA stock and that the Trump administration will allow the deal to pass.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/04/tuesdays-vital-data-bank-of-america-corp-bac-netflix-inc-nflx-and-alibaba-group-holding-ltd-baba/.

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