Monday’s Vital Data: Bank of America Corp (BAC), Netflix, Inc. (NFLX) and AbbVie Inc (ABBV)

What the options are saying about BAC, NFLX, and ABBV

Stocks surged higher on Wall Street on Friday, with traders betting that a Greek debt deal was all but certain. A good call, as negotiators just emerged this morning to announce a deal, sending U.S. stock futures soaring. Despite the rally, the S&P 500 slipped fractionally on the week, logging its third-straight weekly decline.

In the options pits, volume was moderate on Friday, with activity hovering just above the low summer average. On the CBOE, calls began to gain favor once again with the single-session equity put/call volume ratio slipping to 0.67. The 10-day moving average may have finally hit a plateau, finishing its second day at 0.75.

We’ll take a look at some of the more active options leaders: Bank of America Corp (NYSE:BAC), Netflix, Inc. (NASDAQ:NFLX) and AbbVie Inc (NYSE:ABBV).

07-10-2015 Top Ten Options

Bank of America Corp (BAC)

Earnings will arrive hot and heavy this week, and financial stocks will be front and center. Bank of America will be among the first wave, releasing second-quarter earnings on Wednesday. Currently, analysts are expecting a profit of 36 cents per share, up from 19 cents per share last year. Revenue is seen slipping 3% to $21.96 billion.

Options traders have already started clamoring for positions ahead of the event. On Friday, more than 242,000 contracts changed hands on BAC stock, with calls accounting for 73% of the day’s volume. Looking at July options, the $17 level is home to peak call open interest, with 109,171 call contracts in residence. The $17 strike is also home to peak put open interest, totaling 61,551 contracts.

After retreating for much of last week, BAC rallied on Friday to come within striking distance of the $17 level. Bank of America still is below its 50-day moving average, but today’s news out of Greece could give BAC the boost it needs to clear $17 and put this options choke-point behind it.

Netflix Inc. (NFLX)

Morgan Stanley handed out a vote of confidence in Netflix on Friday, sending NFLX stock more than 1.5% higher. The brokerage firm reiterated its “overweight” rating on NFLX shares, but lifted its price target from $620 to $750. Morgan Stanley cited upbeat subscriber growth and Netflix’s international initiatives as reasoning for the increase.

Options traders were more reserved in their stance on NFLX, which should come as no surprise as the stock pulls back from all-time highs. Volume was just above average for NFLX, with 128,300 contracts crossing the tape on Friday. Their was a slight bullish bias, as calls accounted for 57% of the day’s activity. Overall, NFLX’s total put/call ratio has skewed toward the opposite end of the spectrum, and currently sits at 0.98.

AbbVie Inc. (ABBV)

ABBV stock jumped nearly 2% on Friday after news hit that Imbruvica was approved for marketing in the European Union. Imbruvica — the first treatment for Waldenstrom’s macroglobulinemia (WM), a rare, slow-growing blood cancer — already received FDA approval in January.

Options activity was well above normal for ABBV on Friday, as more than 121,000 contracts changed hands. Calls dominated the landscape, accounting for 97% of ABBV’s total volume on the session. Looking at this week’s options outlook, peak open interest totals 12,853 contracts at the overhead $70 call strike. Meanwhile, peak put open interest numbers just 4,655 contracts at the out-of-the-money $65 strike.

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

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