After faltering on Monday due to middling Black Friday sales reports, Wall Street is bouncing back this morning. Stocks are trending higher heading into the open, as traders follow gains in overnight Asian trading.
At last check, futures on the Nasdaq Composite, the S&P 500 Index and Dow Jones Industrial Average were all higher by an average of 0.4%, with Wall Street looking to erase Monday’s losses.
Options volume hovered just below average on Monday, as traders began coming back in earnest from the Thanksgiving holiday break. Calls returned to favor on the session, with the CBOE single-session equity put/call volume ratio falling to 0.65, dragging the 10-day moving average to a three-week low of 0.71.
On the equity options front, Microsoft Corporation (NASDAQ:MSFT) attracted heavy call volume after MSFT stock was upgraded at Raymond James.
Meanwhile, Home Depot Inc (NYSE:HD) finally ended a nine-session winning streak following its stronger than expected third-quarter earnings report on Nov. 17, and Amazon.com, Inc. (NASDAQ:AMZN) call activity spiked after the company emerged as one of the big Black Friday winners.
Microsoft Corporation (MSFT)
Microsoft stock was flooded with call activity on Monday after Raymond James upgraded the shares to “strong buy” from “market perform.” The brokerage firm also set a price target of $72 per share. In addition, Microsoft revealed new features for its $35 per month Office 365 service, which will now include unlimited online conferencing via Skype.
Option volume arrived just above average for MSFT, with some 113,209 contracts changing hands on Monday. Call trading, however, was brisk, with these typically bullish bets accounting for 75% of the day’s take. For the weekly Dec. 4 series, traders have turned their attention to the $54.50 call, where 7,097 contracts are currently open.
With MSFT trading at $54.66 heading into the open, the $54.50 strike is currently trading just in the money.
Home Depot Inc (HD)
Home Depot stock has put on quite a show for the past nine sessions, with the shares rallying nearly 11% after Home Depot posted stronger-than-expected third quarter earnings on Nov. 17. The shares hit an all-time high of $137.47 on Friday before retreating to consolidate those gains yesterday.
With HD stock on a winning streak, options traders looked to cash in on the bull run on Monday. Volume rose well above average for HD, with nearly 93,000 contracts changing hands on the session. Calls dominated the landscape, accounting for 86% of yesterday’s traffic on HD.
As for weekly Dec. 4 activity, options speculators have set their sights on the $135 strike, where peak call OI of 990 contracts currently resides. Additionally, the $132 and $133 strikes have also seen heavy call activity, with 936 and 918 contracts in residence, respectively.
Amazon.com Inc. (AMZN)
Amazon.com has emerged as one of the big winners from Black Friday.
The online retailing giant saw third-party sales rise 20% year-over-year. According to the NRF, 103 million people shopped online for Black Friday this year vs. 102 million brick-and-mortar shoppers. Among the most popular items on Amazon.com were the company’s Fire tablets and Apple Inc.’s (NASDAQ:AAPL) Watches and iPhones.
Despite the strong showing, option activity remains divided on AMZN. On Monday, 89,562 contracts traded on the stock, with puts edging out calls with 51% of the take.
Looking at the weekly Dec. 4 series, peak OI totals 2,520 contracts at the $645 put, while another 2,299 puts are open at the $640 strike. Peak call OI, meanwhile, numbers just 2,097 contracts at the $700 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.