Wall Street suffered a sharp correction Tuesday, forcing the major market indices negative for the year as traders fretted about the possibility of the Fed raising rates sooner rather than later. The selloff prompted another shift in options activity, with the CBOE put/call volume ratio rebounding to 0.67.
To make some sense of the tumult, we’ll take a look at a few of the 10 most active stocks in the options pits: Bank of America Corp (NYSE:BAC), Tesla Motors Inc (NASDAQ:TSLA), and Intel Corporation (NASDAQ:INTC).
Bank of America Corp. (BAC)
A multiyear high for the U.S. dollar and the potential for an end to near-negative interest rates put pressure on shares of Bank of America Corp on Tuesday. Additionally, the banking giant is facing a the second round of the Fed’s strto ess tests today after passing the first round last Thursday. (Though all expectations are for BAC pass with flying colors.)
Options traders certainly don’t appear worried, with 68% of yesterday’s volume (300,679 contracts) trading on the call side. Along those lines, MKM Holdings strategist Jim Strugger suggested on Bloomberg that options traders might want to consider buying the June $17 call for BAC.
Currently, the June $17 call is the second-most popular strike in that month, sporting open interest of 22,775 contracts. The in-the-money June $9 call is the most popular, with 27,228 contracts in open interest.
In premarket trading, BAC stock has recovered nearly 1% to trade just shy of $16.
Tesla Motors Inc (TSLA)
Despite the stock’s recent woes, investors remain hot on Tesla Motors stock. Over the weekend, Tesla provided an update on its $5 billion gigafactory, noting that the facility remains on track (despite rumors to the contrary). Additionally, with Apple Inc.’s (NASDAQ:AAPL) “Spring Forward” event, the question of Apple buying Tesla once again came up repeatedly for CEO Tim Cook. Cook, however, was content to dodge the question, pushing Apple’s CarPlay service instead.
Without any concrete speculation to go on, TSLA stock options traders were divided on the equity’s short-term prospects on Tuesday. In fact, the 102,095 contracts trading on TSLA were split nearly 50/50 between calls and puts on the day. With the weekly March 13 series options expiring on Friday, look for activity in this series to pick up considerably as the weekend approaches.
Premarket, TSLA stock was last seen edging higher by about 0.3% to trade at $190.90.
Intel Corporation (INTC)
Fear of weakening demand is driving considerable activity in the flash-storage and semiconductor market lately, helping to drive Intel stock down more than 3% on Tuesday — outstripping losses on the broader market. Driving short-term concerns is a recent report from BMO Capital Markets that notebook PC sales were considerably weaker in February that analysts were expecting, with shipments reportedly declining 17% month-over-month. The current three-year average is a month-over-month drop of about 3%.
INTC stock has also breached all of its major short-term daily moving averages, with the shares giving up long-term technical support at $32 yesterday. Responding to the drop, options traders were put heavy on the session, with 60% of Tuesday’s volume (190,418 contracts) crossing on the put side.
Checking in with weekly March 13 series options, puts are dominating the landscape. In fact, peak open interest for the series totals 10,148 contracts at the $31.50 strike. The next most popular is the $33 call, with 7,293 contracts in open interest.
In premarket activity, however, bargain hunters appear to be snapping up INTC stock, with the shares up nearly 1% at $32.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
