Stocks finished flat Wednesday, with the major market indices settling in to digest Tuesday’s gains. Call option popularity gained a fraction, with the CBOE put/call ratio slipping to 0.61 from Wednesday’s perch at 0.66.
Tesla Motors Inc (TSLA)
With earnings looming after the close, Tesla shares were pushed 1.6% lower Wednesday, prompting a jump in put option activity relative to call activity. Specifically, 58% of the nearly 222,000 TSLA stock options changing hands yesterday traded on the put side of the coin, despite elevated expectations among analysts heading into the report.
After the close last night, Tesla offered a mixed report. The company posted a loss 13 cents per share in the fourth quarter, with revenue missing expectations by 10% and Model S deliveries missing analyst targets by 1,000 vehicles. Despite the disappointing numbers, Tesla didn’t miss expectations due to a lack of demand, with the company blaming poor deliveries and order backlog on poor weather conditions. Looking ahead, Tesla boosted its 2015 deliveries forecast by 10% to 55,000 vehicles — up 74% year-over-year.
TSLA was down some 8% in Thursday’s premarket trading.
Cisco Systems, Inc. (CSCO)
Shares of Cisco Systems were up nearly 7% in premarket trading, as traders snapped up CSCO stock in the wake of a well received quarterly report. Diving into the numbers, Cisco posted an adjusted profit of 53 cents per share on revenue of $11.94 billion. Wall Street had been expecting earnings of 51 cents on $11.8 billion in revenue.
CSCO stock options activity appeared to be smart money ahead of the event, with 75% of the approximately 405,000 contracts trading on CSCO crossing on the call side of the tape. The February series was far and away the most popular, with some 17,982 call contracts trading on the (at the time) out-of-the-money $28 strike. Another 7,694 calls crossed on the deeper out-of-the-money $29 strike.
If premarket trading activity carries over into the open, CSCO stock is looking at fresh multiyear high territory just shy of $29.
Baidu Inc (ADR) (BIDU)
While CSCO options activity looked like smart money, Baidu options activity appears to have fallen short of the mark. Some 99,000 BIDU stock options changed hands on Wednesday, with 56% of those trading on the call side. Unfortunately for BIDU call buyers, the stock is trading down more than 9% in premarket activity after the company missed Wall Street’s earnings expectations.
For the record, earnings came in at $1.61 per share in the fourth-quarter, missing the consensus estimate for $1.65 per share. Revenue rose to $2.26 billion, narrowly edging out Wall Street’s target for $2.25 billion. Traders also eyed traffic acquisition costs, which rose to 13.4% of total revenue from 12.3% in the same quarter last year.
In late trading Wednesday, BIDU shares had breached the psychological $200 level, and were seen trading below key support at the stock’s 200-day moving average.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.