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Tuesday’s Vital Data: Apple Inc. (AAPL), Bank of America Corp (BAC) and Netflix, Inc. (NFLX)

What AAPL, BAC and NFLX options activity is saying about those stocks


Stocks are once again poised for a negative open this morning, as Wall Street eyes a continued selloff in Asian markets. The wave of (so far mostly disappointing) corporate earnings continues today with The Coca-Cola Co (NYSE:KO), while Federal Reserve Chairwoman Janet Yellen will begin her semiannual testimony before House and Senate committees tomorrow.

As for U.S. stock futures, Nasdaq Composite futures are down 0.58%, while Dow Jones Industrial Average futures are off 0.6% and S&P 500 futures down 0.61% at last check.

Option volume was about average on Monday, though put options continued to gain preference among speculators and those seeking protection from market pressure.  On the CBOE, the single-session equity put/call volume ratio edged higher to 0.93, while the 10-day moving average rose to a one-week high of 0.73.

In equity options news, Apple Inc. (NASDAQ:AAPL) continued to see a decline in overall call volume on Monday, as traders noticed a distinct lack in any major rumors. Meanwhile, Bank of America Corp (NYSE:BAC) may be beaten down, but options traders are making the case for a bull position on the stock. Finally, Netflix, Inc. (NASDAQ:NFLX) remains a whipping boy for the tech bubble, as headlines tout Mark Cuban buying puts on NFLX.

Tuesday’s Vital Data: Apple Inc. (AAPL), Bank of America Corp (BAC) and Netflix, Inc. (NFLX)

Apple Inc. (AAPL)

How low has Apple fallen? You can tell by the rumors, or lack thereof, surrounding the company. Once basking in the spotlight of the next big thing, Apple rumors this weekend consisted of Facebook Inc’s (NASDAQ:FB) battery-draining app, a repair extension program and rumored colors for the iPhone 5se. Not a new touchscreen or higher resolution or new rumored design, but batteries, warranties and colors.

Apple options pits, also once filled with pizzazz, have lurched toward the middle ground of late. Call volume, as a percentage of total daily volume, has fallen off considerably in the past couple of months. Once totaling north of 63%, call activity on Monday accounted for only 53% of the day’s roughly 1.2 million contracts.

Turning toward weekly Feb 12 series activity, AAPL options traders are targeting a continued decline for the stock. Perched near $94 in premarket trading, AAPL is trading south of all major call OI strikes in the series, as well as most major put OI strikes. The next significant level of OI for the shares lies at $90, where 19,157 puts currently reside.

Bank of America Corp (BAC)

Is it time to make a bullish case for Bank of America stock? Options traders may be pointing toward a rebound from oversold levels for the shares, as call volume spiked to account for 71% of the roughly 1 million contracts traded on BAC on Monday.

The stock has been driven lower by the recent market selloff, and, while there could still be additional broad market pressure, there is a case to be made that BAC stock is undervalued and poised for a rebound.

Like many stocks on Wall Street, BAC is trading south of many key OI levels in the options pits. That said, peak put OI in the weekly Feb 12 series currently totals 5,802 contracts at the $12 strike, and could provide a bit of support for BAC in today’s trading. Below $12, there are 3,357 puts at $11.50, and below that is an even heavier selloff until BAC tags $10.

Netflix, Inc. (NFLX)

Bearish favorite NFLX stock continues to take a beating both on Wall Street and in the financial media.  On Monday, headlines touted that Mark Cuban was buying NFLX put options. Buried in the final paragraph of many of these was the admission that Cuban was buying puts for protection against his stock position — a move that suggests a more neutral position on NFLX and a bearish position on the market as a whole.

In fact, Cuban wrote on social media platform Cyber Dust, “I’m not selling. But I have no idea what this market will do.”

Delving into Monday’s options activity, 314,000 contracts traded on NFLX, with activity split evenly between puts and calls on the session. Looking at weekly Feb 12 series OI, NFLX has very little in the way of potential put support until the stock hits $80, where 5,859 contracts currently reside.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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