U.S. stocks are set to open flat to lower this morning, as Wall Street attempts to shrug off overnight weakness in oil and a 6.4% plunge in China’s Shanghai index. Later this morning, traders will be greeted with weekly jobless claims and January’s durable goods orders. At last check, U.S. stock futures on the Dow Jones Industrial Average were lower by 0.06%, with S&P 500 futures down 0.08% and Nasdaq Composite futures off 0.11%.
ETFs were once again extremely popular in options trading, with volume of more than 6 million SPDR S&P 500 ETF Trust (NYSEARCA:SPY) contracts nearly drowning out stock options. Otherwise, Wednesday was rather uneventful, with the CBOE single-session equity put/call volume ratio holding at 0.71, and the 10-day moving average staying put at 0.76.
In equity options news, Facebook Inc (NASDAQ:FB) made headlines after adding emojis to its famous “Like” button. Elsewhere, Salesforce.com, Inc. (NYSE:CRM) saw mixed options activity ahead of last night’s fourth-quarter earnings report, while Chesapeake Energy Corporation (NYSE:CHK) surged after announcing plans to cut capital spending by $1.8 billion.
Facebook Inc (FB)
Facebook made changes to its iconic “like” button on Wednesday. The company added a string of emojis for users to express themselves when responding to posts, including: “love,” “haha,” “wow,” “sad” and “angry.” The list does not include the long-desired “dislike” button that many Facebook users have requested, but the company continues to reject the idea, saying it would create a negative atmosphere.
If FB stock options traders cared one way or the other for the change, it wasn’t apparent in Wednesday’s activity. Volume came in at 553,372 total contracts, just below FB’s daily average for the past month. Call volume was also just below average, accounting for 61% of Wednesday’s take.
As for levels to watch through the close tomorrow, FB has broken above more than 7,400 call contracts at the $107 strike in the weekly February series, but the $108, $109 and $110 strikes all sport call open interest of more than 6,000 contracts, with nearly 9,000 at the $108 strike. Making headway into the weekend could be challenging for FB stock.
Salesforce.com, Inc. (CRM)
After the close last night, Salesforce.com reported fourth-quarter earnings of 19 cents per share, matching Wall Street’s expectations. Revenue rose 25% to $1.81 billion, topping expectations. Furthermore, CRM set first-quarter guidance at earnings of 23 cents to 24 cents per share and revenue of $1.885 billion to $1.895 billion — analysts were expecting 21 cents and revenue of $1.86 billion — and full-year guidance at 99 cents to $1.01 per share — the consensus stands at 99 cents.
CRM stock options traders appeared to be playing it safe ahead of last night’s report. Total volume came in at roughly 223,000 contracts, with calls only accounting for 52% of Wednesday’s take. Salesforce is up nearly 10% in pre-market trading, putting the shares north of peak February call OI of 4,420 contracts at the $67 strike. Another 4,259 calls are open at the $70 strike, and could create headwinds heading into Friday’s close.
Chesapeake Energy Corporation (CHK)
Shares of LNG specialist Chesapeake Energy surged more than 22% on Wednesday after the company announced plans to cut capital spending by $1.8 billion. The company also said it was open selling up to $1 billion in assets. The energy rout has plagued CHK stock in 2016, with the shares down more than 40% even after Wednesday’s surge.
Despite the stock’s spike, options traders remained unconvinced. Overall volume came in above average at roughly 333,000 contracts on Wednesday, with puts snapping up 68% of the day’s take. CHK stock is currently hovering just shy of $2.70, leaving the stock south of 4,245 calls and more than 50,000 puts at the $3 strike in the February series.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
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