Monday’s Vital Data: Facebook Inc (FB), Delta Air Lines, Inc. (DAL) and Chesapeake Energy Corporation (CHK)

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Last week was a mixed one for stocks, with the S&P 500 index eking out a gain of 0.29% during the holiday-shortened week, the Russell 2000 finishing tops with a gain of 1.23%, and the Nasdaq actually ending the week in the red. However, options traders leaned toward the bears’ camp ahead of the long weekend — and it looks like Monday will open with the bears in control — with the CBOE’s put/call volume ratio jumping to its highest level of the year at 0.81.

Among Monday’s most active stocks in the options pits were Facebook Inc (NASDAQ:FB), Delta Air Lines, Inc. (NYSE:DAL) and Chesapeake Energy Corporation (NYSE:CHK). Let’s look at what can be learned from this heavy activity.

Monday’s Vital Data: Facebook Inc (FB), Delta Air Lines, Inc. (DAL) and Chesapeake Energy Corporation (CHK)

Facebook Inc (FB)

Despite a positive research note from brokerage firm Citi Research, shares of Facebook stock finished slightly lower Thursday. Citi lifted its price target on FB stock to $97 from $81.60 per share and reiterated its “buy” rating on the shares. According to Citi, Facebook’s core income and revenue should be able to overcome foreign exchange headwinds, making the stock a solid pick.

Options traders have tended to agree with the bulls in the analyst community, as the April/May put/call open interest ratio for FB stock has fallen from a reading just shy of 0.8 in early March to its current perch at 0.58, indicating that call open interest has been added at a faster clip than put open interest.

This trend appeared to hold firm in Thursday’s session, with 58% of FB’s total volume of 227,243 contracts changing hands on the call side.

Delta Air Lines, Inc. (DAL)

Shares of DAL fell more than 2% on Thursday after the company said that first-quarter unit revenue fell 1.5%. Delta cited currency headwinds and international and domestic bookings that fell below expectations. That said, Delta did note that it expects lower unit costs in the current quarter, with operating margins of 11.5%.

DAL stock options traders chose to see the silver lining, with 86% of the 105,108 contracts falling on the call side of the line. Turning to short-term options activity, peak call open interest for the weekly April 10 series rests at the deep out-of-the-money $48 strike, totaling 2,267 contracts. Peak put open interest, meanwhile, totals 2,434 contracts at the equally out-of-the-money $43 strike.

Chesapeake Energy Corporation (CHK)

It’s a rare occurrence that insider buying makes headlines for a stock, but Chesapeake Energy saw significant activity last week. Specifically, Chairman Archie Dunham bought a block of a million shares at $13.98 each, for a total of $13.98 million. While the activity was welcomed by CHK bulls, the news was tempered after Bank of America reiterated its “underperform” rating on the stock.

Options traders appeared to side with BofA on the matter, with 71% of CHK’s volume of 131,209 contracts trading on the put side. A closer look at CHK’s April/May put/call open interest ratio, however, reveals that some of this activity may have been the closure of existing put positions. In fact, this ratio has fallen from its mid-March reading of 1.05 to its current reading of 0.8, indicating either a rise in call open interest relative to put open interest, or a decline in put open interest overall.

CHK stock is currently trading near multiyear lows due to a massive decline in commodities prices. The shares are currently looking up at overhead resistance at $15, but a break back above this region could bring bargain hunters and technical buyers back to the table.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/04/mondays-vital-data-facebook-inc-fb-delta-air-lines-inc-dal-and-chesapeake-energy-corporation-chk-options/.

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