U.S. stock futures are trading broadly lower this morning, as falling oil prices weighed on Wall Street. European and Asian markets also were lower thanks to weak oil prices, with crude dropping 2.8% in European trading. Overall trading volumes are expected to remain light this week, with many traders not expected to return to Wall Street until the new year.
Heading into the open, U.S. stock futures on the Dow Jones Industrial Average were last seen lower by 0.52%, with S&P 500 futures down 0.43% and Nasdaq Composite futures down 0.36%.
Options activity came in light on Christmas Eve, with call remaining the investment vehicle of choice during the holiday-shortened week. Over on the CBOE, the single-session equity put/call volume ratio rose from a multi-month low of 0.56 to arrive at 0.57. The 10-day moving average was dragged lower to a two-month low of 0.66.
In equity options activity, Apple Inc. (NASDAQ:AAPL) investors, starving for some good news following weeks of sluggish iPhone sales reports, turned to speculation on the coming iPhone 7 for signs of inspiration. Elsewhere, beleaguered SunEdison Inc (NYSE:SUNE) surged and drew heavy call volume after announcing it was in talks to secure new financing, worth as much as $650 million. Finally, Nike Inc (NYSE:NKE) puts were popular despite the company posting a 20% jump in quarterly earnings.
Apple Inc. (AAPL)
Good news has been scant for Apple stock holders lately. The shares have been largely kept out of any Santa Claus rally due to concerns that iPhone 6 and 6s sales were slumping below expectations. With idle hands and a lull in headline developments over the holidays, investors turned toward speculation regarding the iPhone 7, which isn’t due to hit shelves until September next year. More specifically, the focus has fallen on what will not be in the next iPhone.
Over in the options pits, call volume continues to languish below average levels for AAPL stock. Overall volume arrived above the board, with 529,258 contracts changing hands. However, calls only made up about 57% of Thursday’s total volume — well below the average 64%-65%.
Turning toward this week’s open interest levels, peak call OI for the weekly December 31 series totals 15,281 contracts at the overhead $110 strike. Peak put OI for the series, meanwhile, totals 15,487 contracts at the $105 strike. Barring any major market volatility this last week of 2015, AAPL should remain pinned between these two strikes through the end of the year.
SunEdison Inc (SUNE)
SUNE stockholders have been on a roller-coaster ride during the past month. The shares surged some 25% after the U.S. government extended key renewable energy tax credits, then plunged 21% after hedge fund Appaloosa Management LP insisted upon a management change and details for a potential acquisition. Financing issues have been SunEdison’s biggest hurdle, but the company appears to have solved that issue, announcing on Thursday that it is in the process of securing some $650 million in financing via a second lien.
SunEdison call traders were all over the news. Volume on the day swelled to within reach of short-term high territory, with 203,564 contracts changing hands. What’s more, calls accounted for 65% of the day’s take. Looking at weekly Dec. 31 options, peak call OI totals 4,183 contracts at the at-the-money $6 strike, while peak put OI numbers 1,685 contracts at the out-of-the-money $5 strike.
With resistance building at $6, and SUNE’s 50-day moving average also residing in the area, the shares could be hard pressed to make any significant headway this week. In other words, SUNE stockholders may have to wait until 2016 before the shares can stage a larger comeback.
Nike Inc (NKE)
Nike posted blowout second-quarter earnings last week, with profit soaring 20% year-over-year and revenue rising 4% to 7.69 billion. Additionally, the company said that future orders were up 20% year-over-year, handily beating Nike’s own forecast for a 14.1% increase. NKE stock traded in all-time high territory early on Thursday, but retreated throughout the day, as traders took profits on the news.
Option activity was mostly bullish on NKE. Volume topped out at 132,044 contracts, with calls making up 53% of the day’s take. OI for the weekly Dec. 31 series shows peak call OI perched out of the money at the $65 call strike, totaling 7,811 contracts. Peak put OI, meanwhile, numbers 5,180 contracts at the $62 strike. NKE is retreating in premarket trading, and could test support at $62 in today’s trading.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
