U.S. stock futures are pointed lower this morning over concerns that President Donald Trump will pursue a protectionist agenda. Traders are beginning to shift away from the U.S. dollar, with the Japanese yen drawing a safe-haven bid, and oil is also moving lower. In earnings, Halliburton Company (NYSE:HAL), McDonald’s Corporation (NYSE:MCD) and Yahoo! Inc. (NASDAQ:YHOO) will be in focus later today.
Heading into the open, futures on the Dow Jones Industrial Average had slipped 0.1%, while S&P 500 and Nasdaq-100 futures were both lower by 0.19%.
On the options front, Friday’s Jan. 2017 expiration drove massive volume with more than 21.3 million calls and 18.6 million puts crossing the tape. Over on the CBOE, the single-session equity put/call volume ratio whipsawed from a one-month low of 0.59 on Thursday to a two-week high of 0.70. The 10-day moving average, however, held steady at 0.65.
Turning to Friday’s volume leaders, Apple Inc. (NASDAQ:AAPL) saw accelerated bullish bids following report the company is planning new iPad launches in the first half of 2017. Elsewhere, Rite Aid Corporation (NYSE:RAD) puts gained popularity after the Federal Trade Commission (FTC) balked at Walgreens Boots Alliance Inc’s (NASDAQ:WBA) buyout plan. Finally, International Business Machines Corp. (NYSE:IBM) hit a fresh all-time high following strong fourth-quarter earnings.
Apple Inc. (AAPL)
AAPL stock finished Friday pinned at $120, as heavy call and put accumulations at the expiring Jan. 2017 $120 strike proved too much for the stock to overcome.
The shares had plenty of bullish drivers on the session, including a report that Apple was preparing to launch a slate of revamped iPads in the first half of 2017.
Specifically, a pre-publication note in DigiTimes said that Apple is building a “9.7-inch iPad with a friendly price range” for the first quarter, with an updated 12.9-inch iPad Pro and a 10.5-inch iPad for the second quarter. However, the note doesn’t call the 12.9-inch iPad a “Pro” model.
Volume was brisk on AAPL stock Friday, with nearly 1.1 million contracts traded on the shares. What’s more, calls accounted for a well above average 71% of the day’s take. Overall, traders remain heavily focused on the $120 strike in both the 27 Jan. and 3 Feb. series, with the latter bearing the brunt of speculation heading into next week’s quarterly earnings report.
Rite Aid Corporation (RAD)
RAD put options were smart money ahead of Friday’s selloff. On Wednesday last week, a trade publication reported expectations for a WBA deal approval ahead of Trump’s inauguration. Instead of optimism, RAD puts flooded the market.
Friday brought a decision on the WBA deal, with the FTC saying that Walgreens’s proposal to sell 865 drugstores to Fred’s, Inc. (NASDAQ:FRED) was not enough to seal the deal. In fact, the FTC worried about Fred’s taking over so many stores.
RAD stock plunged more than 13% on the news, with options traders once again turning to puts in the wake of the report. Volume for RAD swelled to nearly 950,000 contracts, with puts snapping up 74% of the day’s take. According to Trade-Alert.com, the largest block trade on Friday took place at the Feb. 17 $6 put, where 33,000 contracts traded at the bid of 28 cents, hinting at expectations that RAD may find a floor before the selling runs much further.
International Business Machines Corp. (IBM)
IBM shares vaulted to a fresh 52-week high following Friday’s better-than-expected quarterly report. IBM said it earned $5.01 per share on sales of $21.77 billion, compared to expectations for $4.88 per share on sales of $21.63 billion. The company also boosted its 2017 guidance to $13.80 per share versus the consensus estimate for $13.74 per share.
IBM stock rose more than 2% following the report, though options traders remained rather reserved. Total volume came in at 305,000 contracts, with calls only eking out 54% of the day’s take.
Currently, peak Feb. 17 call OI totals nearly 5,700 contracts at the $170 strike, with another 5,500 open at the $175 strike. Peak put OI for the series, meanwhile, numbers 6,500 contracts at the $165 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.