The major market indices finished Friday mixed, as Wall Street remained cautious ahead of the weekend. Still, the S&P 500 ended a three-week losing streak to close last week at a new all-time weekly closing high. While Greece remains in focus, with Greek banks finally reopening, Wall Street’s attention is shifting toward corporate earnings season amid a rising tide of reports.
Turning to options activity, volume remains above average for the Summer session, with calls once again gaining favor. Overall, the single-session CBOE equity put/call volume ratio fell sharply to 0.55, pulling the 10-day moving average lower to 0.68.
Driving Friday’s activity, Facebook Inc (NASDAQ:FB) is reportedly testing a new e-commerce product designed to allow users to shop directly from their Facebook accounts. Elsewhere, Google Inc (NASDAQ:GOOG, GOOGL) topped Wall Street’s earnings estimates for first time since 2013, and Tesla Motors Inc (NASDAQ:TSLA) announced new options for its Model S line.
Facebook Inc (FB)
According to reports in the Wall Street Journal, Facebook is testing a new e-commerce feature that could place the company in direct competition with Amazon.com Inc. (NASDAQ:AMZN). The new feature would allow Facebook users to buy directly from small- to mid-sized businesses directly from company Facebook pages. While previous attempts at Facebook storefronts have met with little success, the company believes that users’ may begin to accept the changes on social media sites.
FB stock jumped more than 4% following the report, sending the shares to new all-time highs just shy of $95. In the options pits, volume on FB options swelled to a near-term high of nearly one million contracts. Furthermore, calls were quite popular on the day, accounting for 78% of Friday’s total volume. Trader’s obsession with FB calls has been going on for a while now, however, as the stock’s total put/call open interest ratio currently rests at 0.46, with calls more than doubling puts among all FB option open interest.
Google Inc. (GOOG) (GOOGL)
Both Google’s Class A shares (GOOGL) and Class C shares (GOOG) wound their way onto Friday’s most active options listing after Google topped Wall Street’s second-quarter earnings estimates. Specifically, Google posted a profit of $6.99 per share, blowing past the consensus estimate for earnings of $6.75 per share — marking the first time since 2013 that the company has topped expectations. Revenue arrived roughly in line at $17.73 billion.
As for options activity on GOOG and GOOGL, volume swelled to roughly 161,000 contracts and 213,000 contracts, respectively. Calls were also the investment vehicle of choice, accounting for 65% of GOOG’s total volume, and 69% of GOOGL’s volume. Options traders have had a thing for Google calls for some time, though, and the total put/call open interest ratio for GOOGL shares has fallen to a reading of 0.63, with GOOG’s ratio coming in at a slightly higher reading of 0.76.
Tesla Motors Inc. (TSLA)
At a press conference on Friday, Tesla Motors unveiled a new set of options for its Model S line, bolstering investor hopes that the company could meet this year’s sales targets for the vehicle. Among the newly announced options are: a 90 kWh battery, designed for longer life/more mileage; a rear-wheel-drive only model that starts at $5,000 less than the previous standard Model S; and an option for adrenaline junkies that can push their Model S from zero to 60 in 2.8 seconds.
While TSLA option popularity trailed off in the latter half of last week, the stock still saw more than 191,000 contracts change hands on Friday. Furthermore, calls accounted for 67% of Friday’s total volume. Looking at weekly July 24 series options, peak open interest for TSLA stock currently lies at the overhead $280 strike, totaling 3,981 contracts. Meanwhile, another 2,519 contracts are currently open at the in-the-money $275 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
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