Friday’s Vital Data: Apple Inc. (AAPL), Netflix, Inc. (NFLX) and EMC Corporation (EMC)

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The major market indices logged their second straight session of gains on Thursday, as Wall Street digested dovish Fed commentary from the latest policy meeting.

Wall Street had been anticipating a rate hike by the end of the year, but odds are rising that a hike won’t be seen until March 2016. The boost was enough to push S&P 500, Dow Jones Industrial Average, and the Nasdaq Composite above key technical hurdles.

Volume on the CBOE came in slightly above average on Thursday, with calls gaining a bit of ground off a two-day rally on Wall Street. Overall, the CBOE single-session equity put/call volume ratio dipped from Wednesday’s one-week high to arrive at 0.70. The 10-day moving average slipped a notch to 0.76.

On the equity option front, barring any major developments, Apple Inc.’s (NASDAQ:AAPL) weekly October 9 series open interest configuration points toward a potential pinning at $110 today. Elsewhere, Netflix, Inc. (NASDAQ:NFLX) call volume jumped after the company raised subscription rates by $1 for new customers. Finally, EMC Corporation (NYSE:EMC) saw record short-term option volume after reports that the company would either buy Dell Inc. (NASDAQ:DELL), or the two companies would merge.

10-09-2015 Top Ten Options

Apple Inc. (AAPL)

Several minor stories hit the Street for Apple yesterday, including reports that the Apple Watch would be launching in Saudi Arabia and the United Arab Emirates, and that the Apple TV would miss its October release date. None of Thursday’s news was enough to spark a significant move in AAPL stock, despite strength in the overall market, and AAPL’s short-term options configuration may be partly to blame.

On the day, AAPL saw strong volume of 759,914 contracts, with calls garnering 57% of the take. The real issue for AAPL, through today’s close at least, is the wealth of both call and put OI surrounding the stock in the weekly October 9 series. Currently, 17,961 calls and 16,998 puts are open at the October 9 $110 strike. Additionally, more than 20,000 calls are open at the $111 and $112 strikes, and more than 20,000 puts are open at the $109 and $108 strikes.

The net effect for AAPL stock may be that the shares stagnate near $110 through the close today, as positions related to this heavy OI configuration unwind into weekly October expiration. Unfortunately for AAPL shareholders, October 16 series OI doesn’t look much better, with 30,200 calls and 46,366 puts open at the $110 strike. Barring any major events, AAPL stock doesn’t appear to be going anywhere fast anytime soon.

Netflix, Inc. (NFLX)

Despite finishing with a gain of more than 6%, NFLX stock was in fact down more than 5% on Thursday. The massive intraday swing was apparently prompted by news that Netflix was hiking its subscription rate by $1 to $9.99 per month for new subscribers. NFLX’s reaction was so abrupt, it may even be irrational — particularly because new EU subscribers have been shelling out $9.99 per month for a while now.

The surge in NFLX stock brought along with it a spike in NFLX call option activity. On the day, 342,296 contracts traded on the stock — well above NFLX’s average for the past month. Furthermore, calls accounted for 61% of Thursday’s activity, running counter-trend to the stock’s put-heavy OI backdrop.

NFLX traders may want to take some profits here, as the shares are now faced with some pretty stiff technical resistance in the $115-$120 region. Furthermore, options-related resistance could provide an additional hurdle, with more than 6,000 contracts currently open at the $115 call strike in the weekly October 9 series, and 15,344 calls in the October 16 series.

EMC Corporation (EMC)

Reports hit the Street yesterday detailing a potential deal between EMC and Dell. Rumors suggest that EMC will buy Dell outright, or the pair will simply merge into one company. Currently, neither company is commenting on the report. Additionally, analysts at Raymond James have posed the possibility that Hewlett-Packard Company (NYSE:HPQ) may also make a play for a similar EMC deal.

If there’s one thing options traders love, it’s speculation. The reports prompted record short-term volume for EMC, with more than 125,000 contracts changing hands on the issue. Calls accounted for 69% of the take, with weekly October 9 call volume topping out at 2,095 contracts at the $27 strike.  

The October 16 series is where the real OI lies, however. Currently, 41,456 calls are open at the $27 strike in this monthly series, while the $28 and $30 strikes sport OI of 26,740 contracts and 35,599 contracts, respectively. Look for EMC option volume and OI to spike even higher as details on the Dell deal emerge.

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/2015/10/fridays-vital-data-apple-inc-aapl-netflix-inc-nflx-emc-corporation-emc/.

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