U.S. stock futures are awash with red on Monday as we head toward the open on the first trading day of 2016. A rout in China sparked the early-morning selloff after Chinese stocks tripped a circuit-breaker system to halt trading for the day. Heading into the open, futures on the Dow Jones Industrial Average were last seen down 1.78%, with S&P 500 futures off 1.79% and Nasdaq Composite futures lower by 2.06%.
Options volume remained brisk through the end of 2015, with Thursday’s activity coming in well above average for the session. Calls remained on top, with the CBOE single-session equity put/call volume ratio coming in at 0.69. The 10-day moving average edged higher to also close out the year at 0.69.
On the equity options front, Apple Inc. (NASDAQ:AAPL) posted its first annual loss since 2008, making many investors and Trip Chowdhry of Global Equities Research quite angry. Elsewhere, Twitter Inc (NYSE:TWTR) signed a deal with Times Square Alliance to display tweets and Twitter video on the screens below the New Year’s Eve ball in 2016. Finally, Netflix Inc. (NASDAQ:NFLX) received both an upgrade and a downgrade from the analyst community as the stock looks to extend 2015’s impressive winning streak.
Apple Inc. (AAPL)
Yes, for the first time since 2008, AAPL stock has posted an annual loss. While it was a small year-to-date decline, many investors and analysts have been quick to express their displeasure with Apple management. In fact, Trip Chowdhry of Global Equities Research said in a note that Apple CEO Tim Cook is “completely clueless” and should be replaced. Chowdhry also took aim at the company’s board, citing a “culture of bozos” destroying shareholder value.
In options activity, call volume remained on top, but below AAPL’s average daily call activity. Overall, 1.37 million AAPL option contracts crossed the tape on Thursday, with calls coming in at 60% of the day’s take — below the average of 63%.
AAPL stock is trading down sharply in premarket activity this morning, with the shares hovering in the $103 region. As such, the stock is now trading well below all major call OI strikes for the weekly Jan 8 series. Meanwhile, potential put support could emerge at the $102 strike (5,527 put contracts) and the $100 strike (6,854 put contracts).
Twitter Inc (TWTR)
Twitter stock bucked the downtrend on Thursday, with shares gaining more than 4%. Helping to drive the shares higher was news that Twitter has signed a deal with the Times Square Alliance to provide tweets and Twitter video for the monitors below the New Year’s Eve ball in 2016. CEO Jack Dorsey has been under pressure to improve Twitter’s user growth, and Dorsey has answered by upping his marketing game.
TWTR calls were on fire on Thursday. Overall volume topped out at a near-term record 295,342 contracts for Twitter, with calls accounting for 74% of the day’s take. Heading into the open, TWTR is off about 3%, however, putting the shares below all significant accumulations of call OI in the Jan 8 series. As for put support, the $22.50 and $22 strikes both sport OI of more than 1,200 contracts.
Netflix, Inc. (NFLX)
NFLX stock continues to be a divisive issue for the analyst community. Earlier this morning, analysts at Robert W. Baird downgraded NFLX stock to “neutral” from “outperform.” Baird also cut its price target to $115 from $128. Meanwhile, analysts at Vetr upgraded NFLX to “strong buy” from “buy” with a $129.56 price target.
According to Thomson/First Call, NFLX currently sports an average price target of $125 per share, 24 “buy” ratings, 16 “holds” and four “sell” ratings.
Options activity is also reflective of the sentiment split on Netflix stock. Volume on Thursday came in at a brisk 281,502 contracts, with calls snapping up only 49% of the day’s take. NFLX is down more 4% in premarket trading this morning, sending the shares below key support at the $110 level.
NFLX is now trading below all major put and call OI in the Jan 8 series. The only OI of consequence are the 4,518 put contracts at $112, 2,300 put contracts at the $109 strike and the 1,800 contracts at the $105 put strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
