Wall Street appears poised to add to Friday’s rally, with stocks gaining ground on strong U.S. jobs data and European stimulus. Stocks logged their biggest single-session gains in three months on Friday after November non-farm payrolls came in stronger than expected.
Looking to add to Friday’s across-the-board gains, U.S. stock futures on the Nasdaq Composite, S&P 500, and Dow Jones Industrial Average were last seen up, on average, 0.25% heading into the open.
Options volume was strong on Friday, with December expiration driving heavy activity across the board. On the CBOE, the single-session equity put/call volume ratio fell to a reading of 0.61, pulling the 10-day moving average lower to 0.68.
Looking at equity options activity, Apple Inc. (NASDAQ:AAPL) was flooded with calls on Friday due to weekly December 4 series expiration and news that Samsung would finally start paying more than $548 million in penalties for patent infringement. Meanwhile, Kinder Morgan Inc. (NYSE:KMI) options traders appear to be searching for a bottom to the beleaguered stock, as call volume finally outpaced put volume in Friday’s session. Finally, Facebook Inc. (NASDAQ:FB) was also call heavy after the company announced it was testing live video streaming options in the U.S.
Apple Inc. (AAPL)
It looks like Samsung is finally going to pay up after losing a 2012 iPhone patent infringement lawsuit. According to papers filed on Thursday, Samsung has agreed to pay roughly $548 million in penalties related to the infringement of Apple patents used in the iPhone. That said, Samsung is still appealing the decision, which could reverse those penalties.
Driven in part by December expiration, AAPL option volume swelled to a near-term high 846,866 contracts on Friday. Calls were the investment vehicle of choice for AAPL traders, with these typically bullish bets accounting for 64% of the day’s take.
Turning our attention to weekly December 11 series open interest, we find that call traders still have their sights set on the $120 strike, with 15,687 calls currently in residence. Peak put OI for the series, meanwhile, totals just 7,650 contracts at the $110 strike.
Kinder Morgan Inc. (KMI)
KMI stock was pounded once again on Friday, as traders continued to punish the shares after Moody’s cut its outlook on the company from “stable” to “negative”. Kinder Morgan attempted to assuage investor concerns on Friday by stating that its dividend would remain for the current year, but KMI stockholders were having none of it, sending the shares down for a nearly 13% loss.
KMI options traders were not quite as deaf as stock traders, as calls returned to the forefront for the stock on Friday. Total volume came in at a blistering 293,778 contracts on Friday, well above the stock’s daily average for the past month. Furthermore, calls accounted for 54% of the day’s take.
Options traders have yet to fully digest KMI’s recent plunge, however. Specifically, the stock is trading well below peak call and put OI strikes for the weekly December 11 series. For instance, peak call OI totals 1,720 contracts at the $20.50 strike, while peak put OI numbers 1,015 contracts at the $20 strike.
Facebook Inc. (FB)
Facebook was back in the headlines late last week, as the online social media giant announced it was testing live streaming sharing in select U.S. markets. The live video option launched on Thursday for iPhone users, with Facebook expected to roll out the service to Android phones later this year.
Options activity was brisk for FB on Friday, with 263,805 contracts changing hands on the session. Calls remained top dog for FB stock, gobbling up 70% of Friday’s total volume. As for the weekly December 11 series, peak call OI totals 9,310 contracts at the overhead $107 strike, while peak put OI numbers 9,531 contracts at the $101 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.