Thursday’s Vital Data: Bank of America Corp (BAC), Apple Inc. (AAPL) and Facebook Inc (FB)

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U.S. stock futures are trading lower heading into the open this morning, as Wall Street favors caution ahead of key economic data. Ahead of the open, final second-quarter GDP figures will arrive, accompanied by weekly jobless claims and August advance trade goods. Furthermore, there is a bevvy of Federal Reserve speakers slated for this week, which should bring more focus to interest rate hike expectations.

Thursday’s Vital Data: Bank of America Corp (BAC), Apple Inc. (AAPL) and Facebook Inc (FB)

Against this backdrop, futures on the Dow Jones Industrial Average are down 0.2%, S&P 500 futures have slipped 0.16% and Nasdaq-100 futures are off 0.3%.

In the options pits, volume came roaring back on Wednesday, with about 17.8 million calls and 13.7 million puts crossing the tape. On the CBOE, the single-session equity put/call volume ratio fell to 0.61, but the 10-day moving average continued higher to hit another one-month high at 0.65.

Taking a closer look at Wednesday’s volume, Bank of America Corp (NYSE:BAC) options traders were bolstered by CEO Brian Moynihan’s comments on stock buybacks. Meanwhile, KGI Securities analysts defended Apple Inc. (NASDAQ:AAPL) by saying the recent selloff was overdone. Finally, the Russian ads debacle is starting to weigh on Facebook Inc’s (NASDAQ:FB) sentiment outlook in the options pits.

Thursday’s Vital Options Data: Bank of America Corp. (BAC), Apple Inc (AAPL) and Facebook Inc (FB)
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Bank of America Corp. (BAC)

At a conference in London on Wednesday, Bank of America CEO Brian Moynihan backed the company’s preference for stock buybacks over future dividend increases. “Our stock’s a good buy and we’ll continue to buy it until the cows come home,” he said. BofA is expected to return about $14.2 billion to shareholders this year, with the majority of that coming from buybacks.

The added benefit to favoring buybacks over dividend increases is that it keeps Bank of America low key with Regulators. While there is no official rule, federal regulators have urged banks not to increase their dividends to more than 30% of earnings.

BAC options traders cheered the buyback plans. Wednesday’s volume topped 567,000 contracts, just shy of doubling BofA’s daily average. Furthermore, calls made up an above average 67% of yesterday’s take.

That said, BAC’s sentiment backdrop is still rather wishy-washy in the options pits, with the October put/call open interest ratio coming in at 0.71. While calls outnumber puts, this reading is far from typical bullish readings for BAC, which usually range near 0.60. In other words, investors remain wary of BAC stock’s upside potential.

Apple Inc (AAPL)

Was the AAPL stock selloff overdone? That’s what analysts at KGI Securities believe. According to the ratings firm, the brokerage community and investors are focusing too much on iPhone lines to judge demand, and not enough on sales at carriers. KGI said that the market has been “excessively negative” and that Apple expects demand to be a 50/50 split between the iPhone X and 8/8 Plus. By that measure, Apple’s iPhone sales are on pace to meet expectations.

AAPL options traders are reluctantly coming back into the bullish fold, following several sessions of below-average call activity. Volume on Wednesday topped 362,000 contracts, roughly half of the stock’s daily average. Calls activity was also subpar, with these typically bullish bets making up only 60% of the day’s take.

Overall sentiment for October remains largely positive, however. The October put/call OI ratio rests at a reading of 0.65, which is on the high side for AAPL, but still in the bullish spectrum for the stock. Currently, peak call OI totals about 81,000 contracts at the overhead $160 strike, with options traders looking for AAPL to regain this key technical support level.

Facebook Inc (FB)

The investigation into Russian political ads on Facebook was initially blown off by investors. But, as the headlines in the financial news continue to embattle FB stock, the negativity is beginning to take a toll — especially after the tech selloff last week.

The situation has deteriorated to the point that CEO Mark Zuckerberg came out yesterday to defend Facebook’s role in the elections. Zuckerberg also rejected President Donald Trump’s claims that Facebook was “anti-Trump.”

As for options sentiment, volume on FB stock came in at 249,000 contracts yesterday, with calls only making up 59% of the day’s take. For perspective, FB typically sees calls account for roughly 67% of daily activity, meaning that recent options action has shied away from typical bullish bets.

Additionally, FB’s October put/call OI ratio has risen from a range below 0.60 in the past two weeks to its current perch at 0.75. In other words, with FB stock looking vulnerable, even the historically bullish options crowd is beginning to have its doubts about Facebook.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/09/thursday-vital-data-bank-america-corp-bac-apple-inc-aapl-facebook-inc-fb-2/.

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