U.S. stock futures are headed broadly lower once again this morning, with only futures on the Dow Jones Industrial Average clinging to positive territory. The major market indices look ready to resume yesterday’s post-Fed sell-off, as Wall Street reacts to news of an increased pace of interest-rate hikes from the Federal Reserve in 2017. In notes following yesterday’s rate hike, the Fed laid out plans for three additional hikes next year.
Against this backdrop, futures on the Dow Jones Industrial Average are up 0.02%, while S&P 500 futures are down 0.13% and Nasdaq-100 futures have shed 0.2%.
On the options front, volume remained brisk on Wednesday, with about 17.3 million calls and 15.1 million puts changing hands. On the CBOE, the single-session equity put/call volume ratio rebounded from yesterday’s annual low to finish at 0.58, while the 10-day moving average held at a two-year low of 0.57.
Turning to Wednesday’s volume leaders, Facebook Inc (NASDAQ:FB) calls ramped up on reports the company may be looking to compete with Netflix, Inc. (NASDAQ:NFLX) and Amazon.com, Inc. (NASDAQ:AMZN) in the online streaming video market. Elsewhere, Opko Health Inc. (NASDAQ:OPK) volume surged as traders realigned positions in the wake of the company’s kidney drug release. Finally, Nvidia Corporation (NASDAQ:NVDA) call volume leapt in the wake of an upgrade from Evercore ISI.
Facebook Inc (FB)
According to a report over on Recode, Facebook is looking to enter the online video streaming market with its own slate of original content.
In fact, Facebook is already talking with TV studios, producers and other content providers about licensing shows in a move to boost its online video efforts. The move is clearly a step away from Facebook’s repeated assertions that it is simply a social media platform, and not in the business of creating its own content.
FB stock options traders appear to be okay with the move. More than 496,000 contracts traded on FB on Wednesday, with calls accounting for an above average 66% of the day’s take. That said, short-term traders have set their sights on one goal: decisively taking out $120.
FB has bounced around between $115 and $120 for most of December, and the shares look to have finally bested the technical hurdle this week, much to the approval of traders holding the more than 36,000 calls open at this strike in the Dec 19 series — which expires this Friday.
Opko Health Inc. (OPK)
OPK stock made its first appearance on the top ten most active options listing yesterday as traders rushed to roll out of expiring December options and into back month strikes. Opko Health gained notoriety earlier this year after the FDA approved its Rayaldee (calcifediol) extended-release capsules for kidney disease in the U.S. The drug started shipping in the U.S. on Nov. 29, and should have already hit pharmacies across the country.
With no additional news driving activity, OPK saw record short-term options volume of more than 312,000 contracts — 55% of which were of the call variety. What’s more, OPK options were among the largest block trades listed on Trade-Alert.com, with multiple blocks of 19,000 and 11,750 contracts trading on the March $15 and Dec $12 strikes.
Drilling down, it appears that traders were selling Dec $12 puts and calls, while buying up March $15 calls. Without additional information, however, a clear strategy is not apparent.
Nvidia Corporation (NVDA)
Since breaking out to all-time highs in the wake of its most recent quarterly report, NVDA stock has bounced around in the $85-$95 region. In fact, volatility has been rather severe, at times. Case in point: NVDA stock surged nearly 6% yesterday and headed back toward the upper rail of this range after analysts at Evercore ISI upgraded NVDA to “buy” from “hold” and a $120 price target.
The move comes after a Jefferies analysts reiterated a “buy” rating and boosted his price target to $110 on NVDA earlier this week.
Options traders have been bullish standard bearers for NVDA stock in recent weeks, and Wednesday was not an exception. More than 265,000 contracts changed hands on NVDA yesterday, with calls snapping up 60% of the day’s take.
Jan 2017 call options traders have struggled to keep pace with NVDA’s rise, as the shares are trading north of nearly all significant call open interest in the series. In fact, only the 6,400 calls open at the $100 strike represent any major OI, leaving plenty of room to run for NVDA heading into next year.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.