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Friday’s Vital Data: Chesapeake Energy Corporation (CHK), Netflix, Inc. (NFLX) and Intel Corporation (INTC)

U.S. stock futures are once again headed higher in premarket trading today, though volatility remains a concern for Wall Street bulls. Stocks finished flat-to-lower on Thursday despite similar premarket trading pointing toward a positive open this morning, as Wall Street digested the latest projections for a December Federal Reserve rate hike. Heading into the open, futures on the Dow Jones Industrial Average were leading with a gain of 0.34%, followed by the S&P 500 Index, up 0.23%, and the Nasdaq Composite, up 0.21%.  

Options volume fell off considerably on Thursday, as General Electric Company (NYSE:GE) arbitrage activity finally died out. Overall, puts regained popularity on the CBOE, with the single-session equity put/call volume ratio rising to 0.79 ahead of today’s November option expiration. The 10-day moving average, meanwhile, hit another one-month high at 0.77.

On the equity options front, Chesapeake Energy Corporation (NYSE:CHK) surged onto Thursday’s most active options listing after the stock’s 10% plunge kicked in a short-sale restriction, leaving bears with only puts to play with for the afternoon. Elsewhere, Netflix, Inc. (NASDAQ:NFLX) has become a momentum play once again after jumping roughly 20% since its post-earnings bottom on Monday. Finally, Intel Corporation (NASDAQ:INTC) also saw option volume jump after the company boosted its quarterly dividend and raised guidance for 2016.

11-20-2015 Top Ten Options

Chesapeake Energy Corporation (CHK)

Plunging crude and natural gas prices have been the bane of energy stocks in 2015, and LNG supplier Chesapeake Energy has become a whipping post for investor frustrations. With crude dropping sharply once again on Thursday due to record supply and a rising U.S. dollar, traders shoved CHK shares down to fresh multiyear lows, prompting a short-sale restriction on the stock.

CHK bears were not stopped there, however, as option volume exploded to a short-term high of 248,265 contracts. Traders clearly turned to puts to supplement the lack of short selling, as these typically bearish bets accounted for 70% of CHK’s total volume on Thursday.  

Looking at the expiring November series, peak put open interest totals 57,773 contracts at the $5 strike, while 40,063 put contracts are open at the in-the-money $7 strike, and 30,766 puts currently reside at the $4 strike. By comparison, peak November call OI totals just 28,356 contracts at the deep-out-of-the money $9 strike.

Netflix, Inc. (NFLX)

NFLX stock has come roaring back from its post-earnings selloff. The shares are now up roughly 20% from their Monday lows, eclipsing the $120 level for the first time since late August. With NFLX now up nearly 140% on the year, traders are looking to capitalize on additional momentum, with expectations that strong overseas growth will offset stagnating user growth Stateside.

That said, options traders are reluctant to fully embrace a bullish stance on NFLX, as Thursday’s volume suggests. Overall, 207,196 contracts traded on NFLX, with calls accounting for just 54% of the day’s take. Looking at today’s November expiration, the $120 strike will be a key player today, with 6,787 calls and 3,362 puts currently open at this at-the-money strike.

Intel Corporation (INTC)

INTC stock rallied 3.44% on Thursday after the company raised its quarterly dividend by 8.33% and lifted its 2016 revenue guidance. Intel now expects sales to rise in the mid-single digits for fiscal 2016, up 1% from prior guidance. Furthermore, Intel’s quarterly dividend now stands at 26 cents per share, representing an approximate annual yield of 3%.

Option activity was brisk for INTC on Thursday, with 157,768 contracts changing hands on the chips giant. Call activity was muted, but remained in the majority with 53% of the day’s take. As for November options, some 17,000 call contracts are open at the $34 and $35 strikes, while 27,000 and 24,000 contracts are open at the $33 and $32 put strikes, respectively. Look for INTC to be range bound in the $34-$35 region through the close.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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