If it’s one thing Wall Street hates, it’s uncertainty … and the Federal Reserve offered up a healthy dose of uncertainty when it not only stayed its hand on an interest rate hike, but dithered on when such a hike may actually occur. The result was a dive into the red for the major market indices, with the Dow Jones Industrial Average shedding 1.74% and the S&P 500 dropping 1.62%.
Option volume was quite healthy on Friday, driven by the expiration of September series options. Puts were the flavor of choice, as the CBOE’s single-session equity put/call volume ratio jumped to 0.83, while the 10-day moving average rose to a two-week high of 0.79.
Taking a closer look at options activity, Bank of America Corp (NYSE:BAC) drew mixed options activity on Friday after reports surfaced that the company may be cutting up to 1,000 jobs. Facebook Inc (NASDAQ:FB) was a lone bright spot on Friday after MoffettNathanson predicted that Instagram could generate up to $5 billion per year once the service matures. Finally, Netflix, Inc. (NASDAQ:NFLX) is spearheading its push into Latin America by inking a deal with Walt Disney Co. (NYSE:DIS) to offer the Star Wars series in the region.
Bank of America Corp (BAC)
BAC stock followed up its post-Fed plunge on Thursday with another 1.95% drop on Friday. Uncertainty over interest rates and global economic growth cut into revenue projections for BofA, sparking the initial decline. Friday’s selloff was hastened by reports that BofA would cut as many as 1,000 jobs in as part of its capital plan resubmission to the Federal Reserve slated for Sept. 30.
Options volume as mixed, but brisk on BAC on Friday. More than 346,000 contracts changed hands on the equity, with calls edging out puts for control of the session at 54% of the day’s total volume. Looking at weekly Sep 25 series options, traders are now focused on the $15.50 strike put (62,210 contracts in open interest), and the $16.50 strike call (55,353 contracts in OI).
BAC is looking to eclipse those $15.50 puts in premarket trading, rising 0.77% to hover near $15.67.
Facebook Inc (FB)
FB stock was among the few that held their ground on Friday. The shares were bolstered by a report from MoffettNathanson that predicted that Instagram could generate as much as $5 billion in revenue one the service matures. The brokerage placed revenue at $600 million for the coming year, with numbers rising to $1.8 billion afterward.
FB call options remained popular on Friday, snatching up 64% of the 325,000 contracts trading on the session. As for the Sep 25 series, traders have set their sights on the overhead $96 strike call, where 8,088 contracts are currently residing. Put traders, meanwhile, have taken aim at the out-of-the-money $87 strike, with 5,496 puts currently open.
Netflix, Inc. (NFLX)
The Force is strong with NFLX stock as the company intensifies its push toward a global streaming empire. According to a report in the Wall Street Journal, Netflix has signed a deal with Disney to offer five of the six Star Wars movies in Latin America. Currently neither company has commented on the report, but the Journal believes that the news could bolster NFLX stock once it’s officially confirmed.
Despite the coming hype, Friday’s option volume for NFLX was split nearly down the middle. Calls edged out puts on the day, by claiming 51% of the total volume, which came in at brisk 241,301 contracts. As for the Sep 25 series, NFLX shows heavy call accumulations of 1,900 contracts or more at the out-of-the-money $103, $104 and $105 strikes. Meanwhile, the $101 and $102 put strikes sport roughly 1,000 contracts each.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
