U.S. sidled lower once again Thursday, and the major market indices are poised to reverse last week’s gains to post a sizable loss on the week. Options traders appeared to look forward, however, with the CBOE put/call volume ratio dropping noticeably to a reading of 0.58. The 10-day moving average has held at 0.66 for most of the past week.
Tech stocks remained the theme of the week, too. The fiercest action in the options pits Thursday belonged to, among others, Facebook Inc (NASDAQ:FB), Intel Corporation (NASDAQ:INTC) and BlackBerry Ltd (NASDAQ:BBRY).
Facebook Inc (FB)
Shares of social media giant Facebook bucked the overall downtrend Thursday, ending the session fractionally higher. Traders appeared to be reacting to the company’s F8 developers conference, where, among other announcements, Facebook hinted at a 2015 launch for its newly acquired Oculus Rift 3D gaming headset.
Specifically, in reference to a game that F8 attendees were playing, CTO Mike Schroepfer said, “You’re going to be able to do this, this year in VR … and in something shipped by Oculus.”
Whether the activity was Oculus inspired or not, options traders piled into FB contracts on Thursday, sending an above-average 260,464 contracts across the tape. The majority of this volume, 69%, traded as call option contracts. The focus for FB options traders is currently the in-the-money April $80 call, where 103,676 contracts are currently open. The April $80 strike is also popular among put traders, as the 91,587 contracts open at this strike mark it as peak put open interest for FB options.
In Friday’s premarket trading, FB stock was up fractionally.
Intel Corporation (INTC)
Intel and Micron Technology, Inc. (NASDAQ:MU), another of Thursday’s most active options targets, announced yesterday that they were partnering up to produce cutting edge 3D NAND solutions. The partnership is targeting “gum stick-sized SSDs with more than 3.5 terabytes of storage,” and laptop sized solid-state hard drives (SSD) with more than 10 terabytes of storage. Furthermore, the pair promised lower costs and better drive performance through the 3D NAND process.
Intel and Micron both were heavily targeted by options traders on Thursday, though INTC appeared to get the bearish end of the stick, with 56% of the 101,129 contracts in volume trading on the put side, compared to 67% of MU’s 147,508 contracts in volume crossing on the call side.
If you read yesterday’s edition of Vital Data, you know that Thursday’s MU volume was a complete reversal of recent trends for the stock.
BlackBerry Ltd (BBRY)
BlackBerry stock has been quite volatile this morning, with the shares swinging from losses of nearly 4% to gains of more than 6% in premarket trading. The bull/bear battle is centered on the company’s mixed fourth-quarter earnings report, where BlackBerry reported a surprise profit of 4 cents per share, versus expectations for a loss of 3 cents per share, while revenue dropped a greater-than-expected 32% to $660 million.
Yesterday’s options activity appeared to favor the bulls’ case, with 53% of 96,869 contracts trading on the call side. Furthermore, volatility was expected, with weekly March 27 implieds pricing in a post-earnings move of about 6.4%.
Given the stock’s wild gyrations this morning, BBRY’s move could easily outpace implieds once the stock settles on a direction.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
