The major market indices treaded water on Monday, as Wall Street held its breath ahead of another week chock full of corporate earnings reports. Headlining today’s earnings parade is Apple Inc. (NASDAQ:AAPL), with AAPL stock seeing an uptick in call option activity despite a dip in in the shares heading into tonight’s report. Heading into the open, futures on the Dow Jones Industrial Average are lower by 0.1%, while the futures on the S&P 500 Index are off 0.06%.
Options volume slacked from Friday’s expiration-induced frenzy, but remained well above average for the past month. On the CBOE, the single-session equity put/call volume ratio rebounded to 0.72, lining up with the 10-day moving average, which has held at 0.72 for the past eight sessions.
On the equity options front, Alibaba Group Holding Ltd (NYSE:BABA) saw a sharp rise in call volume heading into the company’s quarterly earnings report — a move that looks like smart money with BABA up more than 8% in premarket trading. Calls were not a strong move for Ford Motor Company (NYSE:F) options traders, however, as F stock slipped roughly 3.6% after missing third-quarter estimates. Finally, MannKind Corporation (NASDAQ:MNKD) options traders are already gearing up ahead of Monday’s quarterly earnings release.
Alibaba Group Holding Ltd (BABA)
Bright and early this morning, Alibaba reported non-GAAP fiscal second-quarter earnings of 57 cents per share on revenue of $3.49 billion. On a non-GAAP basis, analysts were expecting a profit of just 49 cents per share, with the whisper number coming in at 54 cents per share, according to EarningsWhisper.com.
Pre-empting the solid earnings performance. BABA stock is up more than 8% in premarket trading, with the shares hovering just south of $83. Options volume was brisk, with a short-term record 458,203 contracts changing hands on BABA. What’s more, calls accounted for 66% of the day’s take.
Should BABA stock carry its premarket lead into the open this morning, the shares will be positioned for additional gains. Major options-related resistance lies at the weekly October 30 series $80 level, with 23,461 contracts currently open at this strike. Meanwhile, some 7,200 calls reside at the $85 strike, leaving BABA some wiggle room to consolidate potential post earnings gains.
Ford Motor Company (F)
F stock doesn’t look to hot heading into the open this morning after Ford missed analysts’ third-quarter earnings expectations. Profits came in at 45 cents per share, 2 cents shy of the consensus. Ford attributed the miss to higher taxes that offset cost savings from its aluminum-bodied F-Series trucks. That said, the F-Series truck line still had its third-best sales quarter in nine years.
F stock is down roughly 3.5% in premarket trading this morning, as investors express concern over the missed earnings target. The dip could catch options traders off guard, as calls accounted for 67% of yesterday’s total volume of 156,839 contracts.
Short-term levels to watch for F stock options traders include the weekly Oct 30 series $16 call, where 30,775 contracts are currently open, as well as the $15.50 strike call, with OI of 8,606 contracts, and the $15 put, with OI of 5,545 contracts.
MannKind Corporation (MNKD)
Options traders are already jockeying for position on biotechnology firm MannKind ahead of next Monday’s looming quarterly report. The company is expected to post a loss of 7 cents per share, up from a loss of 9 cents per share in the same quarter last year. MNKD stock is finally starting to recover from the broadsiding that the biotech industry has taken over drug pricing, and next week’s quarterly report could go a long way toward assuaging investor fears.
On the option front, volume swelled to 158,471 contracts for MNKD, well above average for the security. Calls and puts were split on the day, with call volume gaining a narrow majority of 51%.
Heading into next week, options traders are focused on the weekly Nov 6 series $4 and $4.5 call strikes, with OI totaling 659 and 670 contracts, respectively. Put OI for the series, meanwhile is focused at the $4 strike and $3.50 strike, totaling 342 and 254 contracts, respectively.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
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