Biotechs led Wall Street lower on Monday, with Celladon Corp (NASDAQ:CLDN) stealing the show, dropping 80% after its lead gene therapy for heart failure failed a key trial. When the smoke cleared, the Nasdaq had shed 0.63%, while the S&P 500 closed down 0.41% Options traders were quick to take note, sending the CBOE’s put/call volume ratio higher to a reading of 0.65. The 10-day moving average also edged higher, finishing at 0.63.
Diving into Monday’s most active options, we find that traders flooded Apple Inc. (NASDAQ:AAPL) with calls ahead of the company’s second-quarter earnings report, while shares in Tesla Motors Inc (NASDAQ:TSLA) soared following a bullish battery report from Deutsche Bank. Finally, Applied Materials, Inc. (NASDAQ:AMAT) plunged after the company called off its acquisition plans for Tokyo Electron Ltd. after the DoJ cited antitrust concerns.
Apple Inc. (AAPL)
Apple stock added 1.82% during Monday’s regular session ahead of the company’s second-quarter earnings report. For the record, Apple said it earned $2.33 per share on revenue of $58 billion. Both figures beat Wall Street’s expectations. iPhone sales also were impressive, with Apple reporting shipments of 61.2 million during the quarter.
Options volume flooded AAPL stock heading into the report, with 1.8 million contracts changing hands in Monday’s session. Additionally, some 67% of this volume traded on the call side.
The most active strike was the weekly May 1 series $135 call, where 13,048 contracts traded on open interest of 38,213 contracts. The deeper-out-of-the-money May $140 strike was a close second, as 12,721 calls traded on open interest of 18,878 contracts.
Tesla Motors Inc (TSLA)
Just three days before Tesla was set to officially announced its new consumer business level battery power supplies, Deutsche Bank raved that the power storage market is about to hit it big. “Based on preliminary work on the economics of stationary storage, we believe that this has potential to be more significant than the street currently expects.” Deutsche Bank said in a research note on Monday.
While options traders have expressed more interest in TSLA puts during the past couple of months, calls were the investment vehicle of choice on Monday. Volume totaled 183,597 contracts on the day, with 61% of that activity trading on the call side.
Taking a closer look reveals that the out-of-the-money weekly May series $240 call was the most popular contract on the day. Some 1,610 contracts crossed on the May $240 call, outstripping open interest of just 534 contracts and indicating that much of this activity was likely the initiation of fresh positions.
Applied Materials Inc. (AMAT)
Citing antitrust concerns from the U.S. Department of Justice, Applied Materials announced that it has called off its planned $9.4 billion acquisition for Tokyo Electron Ltd. Announced in September 2013, the deal was to award Applied Materials’ shareholders with 68% of the resulting company, with Tokyo Electron holders controlling about 32%.
Despite AMAT stock plunging more than 9% on the news, traders still heavily favored calls on the session. Specifically, 78% of the 164,162 contracts trading on AMAT crossed on the call side. Among the most interesting AMAT options activity was the 1,237 contracts that traded on the January 2016 series $23 call. Prior to Monday’s session, there were no open call contracts at this strike, indicating the initiation of new positions at this LEAP strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
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