Today’s trading will make or break a three-week win streak for the major market indices on Wall Street, as stocks have foundered for the past several sessions. Despite the lack of action, calls remain popular among short-term traders, with the CBOE put/call volume ratio of 0.55 diving back below its 10-day moving average.
Among the top 10 most active stocks in the options pits were The Coca-Cola Co. (NYSE:KO), Applied Materials, Inc. (NASDAQ:AMAT) and Boardwalk Pipeline Partners, LP (NYSE:BWP). Let’s take a look at options activity is saying about these stocks.
The Coca-Cola Co. (KO)
Share of tasty beverage maker The Coca-Cola Co edged nearly a percent higher Thursday following news that the company was boosting its quarterly dividend by 8% to 33 cents per share. Coke also announced that it has appointed marketing chief Marco de Quinto as an executive vice president.
The move was far from bullish for KO shares, with the stock remaining below several short-term moving averages. As such, most of yesterday’s call volume appears to be related to capturing the company’s increased dividend. On the session, some 131,000 KO stock option contracts were traded, with 83% of those crossing on the call side of the tape.
In premarket trading Friday, KO stock has all but reversed yesterday’s gains, falling 0.85% to trade at $41.75 at last check.
Applied Materials, Inc. (AMAT)
Applied Materials — a manufacturer in the semiconductor space — grabbed a few minor headlines yesterday after announcing that it had increased CEO Gary Dickerson’s compensation by 59% to $16.4 million for 2014. According to Applied, the move was aimed at reducing Dickerson’s taxes ahead of an overseas merger.
Despite the thin news, AMAT stock rallied nearly 3.5% on the day, bringing shares to within a hair’s breadth of the 25 level. Options activity continues to favor calls for AMAT stock, with 88% of the 164,696 contracts in volume trading on the call side. With a tie-up pending for AMAT and Tokyo Electron, much of this call activity could be related to merger arbitrage trades.
Boardwalk Pipeline Partners, LP (BWP)
Playing the multibillion-dollar natural gas and oil sector, Boardwalk Pipeline Partners if often overlooked despite being a $4 billion-plus company. That wasn’t the case in the options pits yesterday, as a major investor made a big move with call options on BWP stock.
Overall, 171,905 contracts were traded on BWP stock on Thursday, with practically all of that volume crossing on the call side (the table round up). According to data from OptionsMonster, a block of 123,061 March $17 calls were sold at a bid price of 65 cents, while a block of 43,844 Sep $18 calls was simultaneously purchased for an ask price of $1.70.
With volume at the September strike arriving above prior open interest, and volume at the March strike below open interest, it appears that this trader rolled out an existing position to a back month. The trader was likely taking a bit of profit while maintaining a long position on BWP stock.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.