Tuesday’s Vital Data: Netflix, Inc. (NFLX), Microsoft Corporation (MSFT) and Office Depot Inc (ODP)

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Wall Street shied away from increased odds of a Fed interest-rate hike on Friday, as jobs data came in stronger than many analysts would have liked. August nonfarm payrolls revealed a dip in the unemployment rate to 5.1%, sending stocks skittering roughly 1% lower on Friday. In the end, the S&P 500 paced the market’s losses, ending down 1.5%.  

Turning to options activity, Friday’s reversal prompted options traders to revisit put contracts on Friday, though volume remained below the two-week average. Overall, the CBOE’s single-session equity put/call volume ratio jumped to a two-week high of 0.89, while the 10-day moving average continued lower to a two-week low of 0.76.

On the equity options front, Netflix, Inc. (NASDAQ:NFLX) continued to draw heavy put volume after a rough week saw competition heat up on multiple fronts. Meanwhile, Microsoft Corporation (NASDAQ:MSFT) also saw increased put volume on Friday, after July sales data saw the company’s Xbox One fall further behind Sony Corp (ADR)’s (NYSE:SNE) PlayStation 4 in the latest console wars.

Finally, Office Depot Inc (NASDAQ:ODP) was heavily favored by put traders following an update on the $6.3 billion merger deal with Staples, Inc. (NASDAQ:SPLS).

Tuesday’s Vital Data: Netflix, Inc. (NFLX), Microsoft Corporation (MSFT) and Office Depot Inc (ODP)

Netflix, Inc. (NFLX)

NFLX stock plunged more than 19% last week, as a wealth of new competition emerged onto the online streaming scene. Apple Inc. (NASDAQ:AAPL) led the charge by announcing a new Apple TV set-top box and potential original TV content deals, while Amazon.com, Inc. (NASDAQ:AMZN) stole Netflix’s thunder in Japan, and Hulu piled on with an ad-free subscription option. All in all, it was a bad week all around for NFLX investors.

With NFLX breaching psychological support at $100 on Friday, put volume came pouring in. Total volume came in at 243,899 contracts, arriving just above the stock’s two-week average, while puts gobbled up 56% of Friday’s activity.  

Looking at weekly Sep 11 series options, traders have loaded up on $80-strike puts, with open interest totaling 8,945 contracts at this out-of-the-money option. Call traders, meanwhile, have targeted the overhead $110 strike, which currently sports OI of 3,172 contracts.

Microsoft Corporation (MSFT)

Microsoft fell further behind in the current generation of console wars in July. According to sales data from VGChartz, Microsoft sold just 314,867 Xbox One consoles in July — less than half of the roughly 650,000 PlayStation 4 units sold during the month. Overall, Microsoft has sold some 13.56 million units worldwide since its launch, well short of the 24.77 million Sony PlayStation 4 units sold.

Adding to investor woes, MSFT stock fell back below its 10-day moving average on Friday, after the shares were once again rejected by short-term resistance at $44. The weakness prompted a jump in put volume for MSFT shares, with the typically bearish bets accounting for 58% of Friday’s 113,360 contracts in volume.

As for weekly Sep 11 series activity, put traders have taken an interest in the $41.50 strike, which is currently home to more than 10,800 put contracts. The $42 strike put is also seeing heavy activity, with 7,245 contracts currently open. Call traders, meanwhile, have loaded up on $43 strike calls, with OI topping 4,000 contracts.

Office Depot Inc (ODP)

ODP was flooded with put volume on Friday following an update on Office Depot’s pending merger with Staples. Specifically, Office Depot and Staples said that they have complied fully with the FTC’s request for additional information on the $6.3 billion merger. The deal is not set to close for another 40 days, while the FTC weighs potential antitrust concerns. In the event of a merger, the combined company would control roughly 80% of the corporate office supplies market.

Puts dominated ODP options activity on Friday. Some 103,000 contracts traded on the day, with puts claiming 99% of all activity. That said, most of the volume was directed at back-month strikes, with weekly Sep 11 series puts remaining low on the list of priorities. In fact, peak weekly September put OI totals just 298 contracts at the $7 strike. Meanwhile, peak call open interest numbers 2,539 contracts at the overhead $9 strike.

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/2015/09/tuesdays-vital-data-netflix-inc-nflx-microsoft-corporation-msft-office-depot-inc-odp-options/.

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