Thursday’s Vital Data: Bank of America Corp (BAC), Chevron Corporation (CVX) and Peabody Energy Corporation (BTU)

Wall Street is trading slightly higher this morning as traders digest news that the European Central Bank will cut rates and expand its stimulus program. Ahead of the news, U.S. stock futures on the Dow Jones Industrial Average were higher by 0.22%, with S&P 500 futures up 0.31% and Nasdaq Composite futures rising 0.27%.

Options volume was muted on Wednesday, as options traders took a breather ahead of the ECB’s monetary policy decision. On the CBOE, the single-session equity put/call volume ratio whipsawed to a near-monthly low of 0.68 from yesterday’s perch at 0.90.  The 10-day moving average, meanwhile, resumed its former decline to arrive at 0.66.

In equity options news, Bank of America Corp (NYSE:BAC) saw renewed vigor in the options pits after news broke that the company is diving into peer-to-peer lending (P2P) using Early Warning’s clearXchange network. Elsewhere, Chevron Corporation (NYSE:CVX) saw a surge in options activity after announcing plans to slash 2017 and 2018 capital spending. Finally, rumors are swirling that Peabody Energy Corporation (NYSE:BTU) may be forced into bankruptcy reorganization via its senior lenders.

Thursday’s Vital Data: Bank of America Corp (BAC), Chevron Corporation (CVX) and Peabody Energy Corporation (BTU)

Bank of America Corp. (BAC)

Bank of America is once again on the cutting edge of personal banking. In a press release yesterday, P2P lending specialist Early Warning announced that BofA was live on its clearXchange P2P lending network.  P2P lending allows Bank of America customers engage in real-time direct transactions between other P2P enabled accounts. Currently, only BofA and U.S. Bancorp (NYSE:USB) use Early Warning’s network.

While overall options volume was down yesterday, BofA volume was still just above average. More than 440,000 contracts changed hands on BAC yesterday, with calls snapping up 68% of the day’s take. Levels to watch heading into weekly March 11 series expiration tomorrow include the $13.50 call strike, where nearly 68,000 contracts are open, and the $13 put strike, which sports open interest of more than 20,000 contracts.

Chevron Corp. (CVX)

CVX stock jumped nearly 5% on Wednesday after Chevron announced that it was slashing capital spending for fiscal 2017 and 2018. Specifically, the Dow component sees spending down at $17 billion to $22 billion for 2017 and 2018 compared to previous estimates of $20 billion to $24 billion. CVX has struggled amid failing energy prices, and analysts are speculating that the cut in spending is a move to protect the company’s dividend payout — currently at 4.9%.

Options traders offered up mixed reviews on the move. Overall activity came in at a near-term high of nearly 240,000 contracts for CVX, but puts were the most popular, accounting for 54% of the day’s total. Levels to watch for tomorrow’s expiration include the $92.50 call strike, where roughly 1,000 contracts are currently open, and the $93 put, with OI of 1,137 contracts.

Peabody Energy Corporation (BTU)

Shares of Peabody Energy soared nearly 30% yesterday. The stock received so much attention early in the session, that trading was briefly halted. Speculation was swirling, but some of the brisk trading could have related to rumors that senior lenders are attempting to force Peabody into bankruptcy reorganization. Peabody is currently looking to sell three mines in a $463 million deal to help stave off lenders.

BTU calls were the hot topic on Wednesday, as the stock saw short-term record volume of more than 230,000 contracts. In fact, calls accounted for roughly 70% of yesterday’s total volume.

That said, it was long-term options that saw the bulk of Wednesday’s action, with January 2018 series $5 and $8 strike calls receiving what appeared to be buy-to-open activity. While these may very well be long-bull calls on BTU stock, there is also the possibility of speculative arbitrage action surrounding a potential Peabody bankruptcy.

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

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