U.S. stock futures are in rally mode this morning, as Wall Street hopes for positive outcomes this Super Thursday. Former FBI Director James Comey will testify, the U.K. election is taking place and the ECB has left its key interest rates unchanged, noting it expects to leave rates alone for an extended period of time. The overall mood on the Street, however, is bullish as most traders continue to eye economic growth as a more significant driver for the current rally.
Heading into the open, futures on the Dow Jones Industrial Average are up 0.01%, S&P 500 futures have gained 0.06% and Nasdaq-100 futures have jumped 0.23%.
On the options front, volume moderated back below average on Wednesday, as only about 13.8 million calls and 13.2 million puts crossed the tape. On the CBOE, the single-session equity put/call volume ratio ticked lower to 0.58 and the 10-day moving average held at 0.61.
Diving into Wednesday’s options activity, Tesla Inc (NASDAQ:TSLA) held its annual investor meeting this week, offering details on the Model 3, Model Y and a new mystery project. Meanwhile, Yahoo! Inc. (NASDAQ:YHOO) was front and center for options traders following news that Verizon Communications Inc. (NYSE:VZ) would lay off 1,000 workers after acquiring “Yahoo” and AOL. Finally, Pandora Media Inc (NYSE:P) is whipsawing as investor hopes for an acquisition fade, but Sirius XM Holdings Inc. (NASDAQ:SIRI) keeps hopes alive with investment speculation.
Tesla Inc (TSLA)
At the company’s annual investor meeting, Tesla CEO Elon Musk outlined details for the Model 3, the Tesla semi truck, the Model Y and a mystery product. For the Model Y, Musk said that creating a new platform for the vehicle would allow Tesla to build the SUV with “substantially less capital expenditures.” Musk anticipates the SUV to begin deliveries in 2019 and that demand will exceed the Model 3.
As for the mystery vehicle, Elon Musk had only this to say: “I would just really recommend showing up for the semi truck unveiling. Maybe there’s a little more than we’re saying here.”
As a result, TSLA stock edged further into all-time-high territory, pushing through resistance at $350. Options traders, meanwhile, remain quite reserved when it comes to TSLA’s prospects. On Wednesday, more than 440,000 contracts traded on TSLA, with calls only making up 53% of the day’s take. What’s more, the current June put/call open interest ratio arrives at 1.56, rising sharply from 1.39 back on May 31.
In other words, TSLA options traders remain highly skeptical of the stock’s advance, and appear to be expecting a retreat — possibly once the Model 3’s begin hitting the streets (a sell on the news event).
Yahoo! Inc. (YHOO)
There won’t be much of the former Yahoo! left once the company completes its acquisition with Verizon. The communications giant is snapping up the traditional “Yahoo!” properties and AOL in its acquisition, leaving Yahoo (which will change its name to Altaba Inc.) with legal woes and Alibaba Group Holding Ltd (NYSE:BABA) holdings. YHOO stock, meanwhile, has attracted considerable attention following news last night that Verizon will lay off 1,000 Yahoo! and AOL employees following the acquisition.
YHOO options traders have been quite active this week as the Verizon deal nears a close. On Wednesday, 402,000 contracts traded on YHOO, with calls only making up 48% of the day’s take.
There isn’t much exciting to take away from this options activity, unfortunately, as a majority of it appears to be arbitrage speculation surrounding the Verizon deal. That said, YHOO stock is up more than 9% this morning, with traders speculating that Alibaba could be worth more than initial expectations, especially with Alibaba stock surging this morning.
Pandora Media Inc. (P)
Pandora investors are tired of waiting. The company has been shopping for a suitor for the past several months, but, aside from talk with Sirius XM, no buyers have emerged. Today is kind of a deadline for a buyout deal, as KLM Partners offered to invest $150 million if no suitor arrived by June 8. With no deal emerging, P stockholders sold off on the belief that no white knight was arriving.
However, reports emerged last night that Sirius XM is looking to invest in Pandora, but details have yet to emerge.
P options traders, however, appeared optimistic that some form of a deal would emerge. Volume rose to over 198,000 contracts on Wednesday, with calls making up 88% of the day’s take. What’s more, calls dominate P’s June backdrop, with the June put/call OI ratio arriving at 0.20, with these bullish bets more than quintupling puts among options set to expire this month. If a deal does emerge, these call traders will be sitting pretty.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.