The major market indices kicked off March on a positive note Monday, resuming their former trek toward all-time high territory. Call volume returned to favor on the CBOE, with the exchange’s put/call volume ratio dropping to a reading of 0.57, below the 10-day moving average of 0.59.
Of particular interest to us among the most active companies in the options pits were Apple Inc. (NASDAQ:AAPL), Intel Corporation (NASDAQ:INTC) and Cisco Systems, Inc. (NASDAQ:CSCO). Let’s take a look at their action.
Apple Inc. (AAPL)
Between the Apple Watch and the Apple Car (which is apparently being taken seriously by automakers), it’s easy to forget lately that the company also makes smartphones.
A Gartner report released yesterday, however, reminded investors that Apple remains a dominant force in the mobile market, with the company eclipsing Samsung (OTCMKTS:SSNLF) for the top spot in smartphone market share during the fourth quarter. According to Gartner, Apple gobbled up 20.4% of the smartphone market, overtaking a slipping Samsung, which clung to market share of 19.9%.
As always, Apple remains tops in terms of equity options data, attracting volume of 724,070 contracts on Monday. Despite the lower-than-normal volume, AAPL traders did not shy away from calls, with these typically bullish bets accounting for 66% of all activity yesterday. Short-term out-of-the-money calls are most popular at the moment, with the weekly March 6 series $130, $132 and $133 strikes sporting heavy open interest.
Technically, AAPL is edging higher in premarket trading, with the shares renewing their fight with resistance in the $130 region this week.
Intel Corporation (INTC)
Shares of semiconductor giant Intel gained 2.44% on Monday, as INTC stock rebounded from support at its 200-day moving average. Investors appeared hopeful following the unveiling of three new Atom chips designed to make the company more competitive in the smartphone market. Reactions were tempered, however, as Citigroup analysts reiterated a “neutral” rating on INTC stock, citing the company’s continued struggle to make serious in-roads into the mobile market space.
Options traders appeared to largely ignore Citi’s noncommittal stance, opting for call options in Monday’s trading. Of the 88,233 contracts trading on INTC stock, 74% crossed on the call side. In the short-term, the overhead weekly March 6 series $35 call is currently king with 14,699 contracts in open interest. The next most popular weekly March strike is the out-of-the-money $34.50 call, with open interest of just 6,563 contracts.
Cisco Systems Inc. (CSCO)
Blue-chip networking firm Cisco Systems provided some positive news for investors yesterday, announcing strengthening sales in Chinese and Indian markets. CEO John Chambers also outlined an aggressive outlook for the company, including an active merger & acquisition strategy for the coming year.
CSCO stock bulls were happy with the news, sending the stock 2.3% higher to eclipse $30 for the first time since mid-2010. The $30 level is a key psychological level for CSCO stock, and a breakout above this region could have bullish implications for the shares.
Taking their cues from the news and CSCO’s price action, options traders heavily favored calls in Monday’s trading. In fact, 74% of Monday’s volume (85,516 contracts) traded on the call side of the tape. As you may have guessed, the March $30 call strike is home to peak front-month open interest, with 69,588 contracts in residence. Another 68,488 contracts are open at the in-the-money March $29 strike, while another 43,284 contracts are open at the deeper in-the-money March $28 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
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