U.S. stock futures are soaring this morning, with the Dow poised to jump nearly 200 points on the open. Wall Street cheered a potential oil deal, where Saudi Arabia, Russia, Venezuela and Qatar agreed to freeze production at January levels, while the European Central Bank hinted that more easing could arrive in March.
Heading into the open, futures on the Dow Jones Industrial Average are up 1.18%, while futures on the S&P 500 are higher by 1.2% and Nasdaq Composite futures are up 1.6%.
Equity option volume peaked above average on Friday, as weekly February expiration and a three-day holiday weekend drove additional speculation. On the CBOE, the single-session equity put/call volume ratio retreated to a two-week low, while the 10-day moving average is looking a bit top-heavy after hitting a four-week high of 0.8.
In equity options news, Apple Inc. (NASDAQ:AAPL) is seeing its first lawsuit related to the iPhone “Error 53” debacle, while Facebook Inc (NASDAQ:FB) was targeted by bearish commentary from UBS on Friday. Finally, Netflix Inc. (NASDAQ:NFLX) was downgraded on Friday by FBR Capital.
Apple Inc. (AAPL)
In what could be the first of many, law firm PCVA filed a class-action lawsuit against Apple over the “error 53” issue many iPhone users saw following the most recent software update. The issue stems from having third-party repair work done on the touchpad security feature on the iPhone 6s, where the latest software update has “bricked” many users’ phones. Apple’s official line is that the update was a security feature.
AAPL options traders failed to take note of the latest legal development. In fact, call volume returned to normal levels on Friday, with these typically bullish options accounting for 66% of the session’s total volume of nearly 980,000 contracts.
With AAPL trading north of $95 in premarket activity levels to watch this week include the Feb $95 and $100 calls, and the $95 put. Currently, there are nearly 77,500 calls open at the $100 strike, with another 18,850 open at the $95 call strike. On the put side, the $95 strike sports OI of 35,600 contracts.
Facebook Inc (FB)
Facebook saw some surprisingly bearish commentary from the brokerage community on Friday. Specifically, UBS said that the stock still has not bottomed in the current market rollover that has seen many “new tech” stocks pushed sharply lower. A UBS analyst told CNBC on Friday that they believe that “money is going to flow to companies that actually have some earnings and free cash flow.”
Once again, options traders were at odds with the headline news. On Friday, FB saw total volume of nearly 750,000 contracts, with calls accounting for 65% of the day’s take. Facebook is hovering just above $104 in premarket activity, placing the 7,706 calls open at the Feb $95 strike in play. Potential put support, meanwhile, materializes in the form of 5,090 contracts at the $93 strike.
Netflix, Inc. (NFLX)
Another “new tech” company getting panned on Friday, Netflix was hit hard by FBR Capital heading into the three-day weekend. The brokerage firm cut NFLX stock to “market perform” from “outperform” and lowered its price target to $100 from $125. FBR cited increased risks, including the potential for slowing U.S. subscriber growth and increased competition.
Options traders seemed to follow FBR’s lead on Friday. Total volume rose to nearly 395,000 contracts, with puts making up 53% of Friday’s activity. Heading into the open, NFLX is trading north of $89, with shares facing down nearly 4,500 call contracts at $90 in the February series. Put support, meanwhile, doesn’t arrive until the $85 strike, where roughly 7,000 contracts currently reside.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
