Selling pressure continued on Wall Street on Wednesday, as the major market indices decline was capped by the S&P 500 index’s dip below the 2,100 level. Over on the CBOE, calls remained out of favor, with the exchange’s put/call volume ratio dipping only slightly to 0.61.
Among the top 10 most active stocks in the options pits were Yahoo! Inc. (NASDAQ:YHOO), Abercrombie & Fitch Co. (NYSE:ANF) and Ford Motor Company (NYSE:F), so let’s take a look at what had traders so excited.
Yahoo! Inc. (YHOO)
Takeover speculation drove Yahoo! stock sharply higher Wednesday. The speculation started after a Chinese publication explored a potential buyout by Alibaba Group Holding Ltd (NYSE:BABA) with the company’s founder Jack Ma. According to Ma, a YHOO buyout is a political issue, not a monetary issue, noting that “the money is worth it.”
In response, YHOO options traders piled into calls, with 79% of the 119,996 contracts trading on YHOO crossing on the call side. In the weekly March 6 series, the overhead $45 strike call is most popular, sporting open interest of more than 12,000 contracts.
Pulling back to monthly March options, the deep out-of-the-money $50 strike is home to peak call open interest of 38,645 contracts.
Abercrombie & Fitch Co. (ANF)
Shares of teen retailer Abercrombie & Fitch were hammered yesterday after the company reported dismal fourth-quarter earnings figures. Detailing the key numbers, ANF’s revenue fell 14% to $1.12 million, missing expectations for $1.17 million. Same-store sales were also poor, falling 10% in the fourth-quarter.
Abercrombie shares responded by plunging more than 15% to hover near round-number support at $20. Given premarket activity this morning, ANF stock could be in danger of breaching this key support level today. Options traders were quick to pick up on the potential extended decline for ANF, with 65% of the 81,788 contracts in volume trading on the put side.
Taking a look at popular put strikes for ANF, heavy open interest lies at the weekly March 13 series $23 strike, where 26,207 contracts reside. What’s more, another 15,937 puts are open at the still out-of-the-money weekly March 13 series $18 strike.
Ford Motor Company (F)
February U.S. vehicle sales arrived earlier this week, and the results were not all that fabulous for Ford. Specifically, the auto maker reported that sales fell 1.9% year-over-year, with an 8.1% drop in car sales and a 2.3% decline in utilities sales. Truck sales, the only bright spot, rose 4%.
In the wake of the report, F stock has pulled back from short-term resistance near $16.50 to hover just above support in the $16 region, which is home to F’s 200-day moving average. A breach of this trendline could lead to additional selling pressure, as technical traders reassess their positions in F stock.
Options traders appear optimistic for a rebound. The stock saw volume of 79,246 contracts on Wednesday, with 77% of that volume crossing on the call side. In the March series, options traders are focused heavily on the $16 and $17 call strikes, which sport open interest of 42,504 contracts and 33,113 contracts, respectively. On the put side, the March $16 and $15 strikes are getting the most attention.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
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