U.S. stock futures are slightly higher this morning, with the major market indexes on track for weekly gains. Wall Street is showing a bit of trepidation heading into this weekend’s Group of 20 meeting in Germany, especially with a delayed meeting between President Donald Trump and German Chancellor Angela Merkel. Recent strength in the U.S. dollar and Trump’s “America First” protectionist policies are expected to be hotbed issues.
Against this backdrop, futures on the Dow Jones Industrial Average are up 0.09%, with S&P 500 futures lost 0.01% and Nasdaq-100 futures rising 0.12%.
On the options front, volume remained brisk on Thursday, with about 18.2 million calls and 13.4 million puts changing hands. Traders should expect volume to remain relatively high today due to the expiration of March contracts. On the CBOE, the single-session equity put/call volume ratio plunged again, dropping to 0.57, though the 10-day moving average remained pinned at 0.64.
Turning to Thursday’s volume leaders, Nvidia Corporation (NASDAQ:NVDA) made waves in the options pits after announcing a new partnership with world’s largest auto supplier Bosch. Elsewhere, Bernstein initiated coverage on Netflix, Inc. (NASDAQ:NFLX) and oddly compared the stock to belief in Jesus. Finally, Opko Health Inc. (NASDAQ:OPK) saw impressive activity after Guggenheim initiated coverage on the biopharmaceutical firm.
Nvidia Corporation (NVDA)
Nvidia and Bosch could be ushering in the future of the self-driving car, Needham said yesterday. The duo announced a new partnership on Thursday that could integrate Bosch’s Driving Policy software and Nvidia’s next-generation Drive PX system. Needham reiterated its “buy” rating on NVDA stock with a $120 price target on the shares — about a 16.5% premium to yesterday’s close.
NVDA stock rose 1.23% following the research note, and is up more than 1% in premarket activity this morning. Options traders, however, appeared reserved on Nvidia, with calls and puts splitting the more than 206,000 contracts in total volume.
This trepidation is readily apparent in NVDA’s short-term options outlook. For instance, the April put/call open interest ratio currently rests at 0.93, with calls and puts in near parity. What’s more, peak April call OI of about 14,000 contracts lies at the in-the-money $100 strike, indicating a lack of confidence in a continued rally. Still, with NVDA holding north of support at $100, the shares could still find room to run over the short-term.
Netflix, Inc. (NFLX)
“If Jesus were a stock, he’d be Netflix. You either believe or you don’t,” said Bernstein analyst Todd Juenger yesterday in a research note to clients. Juenger initiated coverage on NFLX stock with an “outperform” rating and a $178 price target, and quipped that Netflix “is a polarizing stock; No matter which side we take, we will alienate half our readership.”
Polarizing is right, as Thomson/First Call reports that about half of analysts covering NFLX rate the shares a “hold,” and nearly 6% of the stock’s float is sold short. NFLX options traders are also hotly divided, as evidenced by yesterday’s activity. Total volume came in at 195,000 contracts, with calls and puts split nearly down the middle.
And, if we look out to the April options series, we find that the bears have a bit more influence than bulls. Currently, the April put/call OI ratio for NFLX stock arrives at 1.24, with puts easily outnumbering calls among short-term options. NFLX may have its detractors, but the shares are still up more than 12.5% this year with growing support in the $140 region. A rebound and a short-squeeze could be all the bulls need for reasons to believe.
Opko Health Inc. (OPK)
Shares of biopharmaceutical firm Opko Health popped earlier in the week after Guggenheim initiated coverage on OPK stock with a “buy” rating and a $25 price target — a more than 200% premium to yesterday’s close. The upgrade pushed OPK stock north of short-term resistance at $8, though the shares were rejected by resistance at their 50-day moving average near $8.50.
This didn’t stop speculation on OPK stock in the options pits, however, as volume tagged a near-term high of more than 224,000 contracts. Calls and puts were near evenly matched, with calls claiming a slight edge at 52% of the day’s take.
Block activity on OPK was interesting, to say the least. According to Trade-Alert.com, blocks ranging from 15,000 to 16,000 contracts traded on the September, April and May $10 and $12 put and call strikes. A closer look reveals that most of the call contracts were sold, while the puts were purchased, hinting that risk reversal strategies may have been popular on OPK in yesterday’s trading.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.