U.S. stock futures are trading sharply lower this morning, as Wall Street seeks cover ahead of what could be a very volatile weekend. Hurricane Irma, the most powerful Atlantic storm ever, is barreling toward Florida, while political tensions are on edge ahead of a potential North Korean missile launch.
The North’s founding day is this Saturday, and the country has a history of using military displays in celebration. What’s more, North Korea put the world on edge last week after testing a potential hydrogen bomb. Geopolitical analysts believe that a North Korean missile launch could take place on Saturday amid the country’s founding day celebrations.
Against this backdrop, futures on the Dow Jones Industrial Average have fallen 0.25%, S&P 500 futures are down 0.21% and Nasdaq-100 futures have shed 0.15%.
On the options front, traders pushed volume back toward normal levels on Thursday, with roughly 14.8 million calls and 12.3 million puts changing hands. On the CBOE, the single-session equity put/call volume ratio dipped to 0.55, while the 10-day moving average ticked lower to 0.60.
Taking a closer look at Thursday’s options activity, T-Mobile US Inc’s (NASDAQ:TMUS) free Netflix, Inc. (NASDAQ:NFLX) deal has investors in AT&T Inc. (NYSE:T) worried about potential subscriber losses. Speaking of subscriber losses, both Walt Disney Co (NYSE:DIS) and Comcast Corporation (NASDAQ:CMCSA) indicated issues with cable subscribers in their mid-quarter updates.
AT&T Inc. (T)
Subscriber growth was already tight for AT&T. With cord cutting eating away at its U-Verse and DirecTV subs, and the wireless market always being ultra-competitive, T stock has struggled to make any headway this year.
T-Mobile broadsided AT&T’s growth expectations last week by announcing free Netflix for unlimited subscribers. Growth expectations were already slim for AT&T, but T-Mobile’s Netflix deal could make matters even worse this quarter.
T stock has fallen 5.5% since the announcement, and puts volume has ramped up considerably. Take Thursday’s activity for example. Volume rose to 253,000 contracts yesterday, nearly five times T’s daily average. What’s more, puts made up nearly half of that excessive volume.
Looking out to October options, the put/call open interest ratio currently stands at a lofty 1.69 for T stock, with puts easily outnumbering calls in this back-month series. The heaviest put accumulations are at the Oct $37 strike, with more than 52,000 put contracts open. Meanwhile, the $36 and $34 strike puts have seen continued accumulations — maybe options traders are taking advice from my colleague Chris Tyler.