U.S. stock futures are trading broadly higher this morning, as Wall Street prepares for the start of another earnings season. Big banks will kick earnings into high gear today. J.P. Morgan Chase & Co. (NYSE:JPM) has already stepped into the earnings confessional this morning. Following on its heels are Goldman Sachs Group, Inc. (NYSE:GS) and Morgan Stanley (NYSE:MS) and Bank of America Corp. (NYSE:BAC) reporting next week.
Heading into the open, Dow Jones Industrial Average Futures are up 0.23%, S&P 500 futures have lost 0.03% and Nasdaq-100 futures have dropped 0.12%.
Turning to the options pits, Thursday’s volume was brisk. Overall, about 22.3 million calls and 15.1 million puts changed hands. The CBOE single-session equity put/call volume ratio rose to 0.63. The 10-day moving average ticked lower to 0.56.
Taking a closer look at yesterday’s options activity, Bank of America drew heavy call activity amid the plethora of financial firms releasing quarterly earnings. BofA reports Wednesday next week. Meanwhile, Micron Technology, Inc. (NASDAQ:MU) options traders loaded up on calls despite the stock’s Intel Corporation (NASDAQ:INTC) driven plunge. Finally, Delta Air Lines, Inc. (NYSE:DAL) volume ramped up following a solid quarterly report.
Bank of America Corp. (BAC)
There is a wave of reports from the financial sector today, but you’ll have to wait until next week to hear from Bank of America. BofA will release its fourth-quarter report ahead of the open on Wednesday next week. Analysts are expecting a profit of 44 cents per share on revenue of $21.53 billion. EarningsWhispers.com puts the whisper number at 48 cents per share.
Options traders are already gearing up for the report. On Thursday, BAC options volume topped 486,000 contracts, or roughly 1.5 times the stock’s daily average. Calls accounted for a whopping 82% of the day’s take.
Currently, expectations are a bit muted for Bank of America. The January 2018 put/call open interest ratio arrives at 1.02, with puts just outnumbering calls for the series. This ratio is trending lower, however, as calls are being added at a faster pace with earnings less than a week away.
Micron Technology, Inc. (MU)
MU stock’s bull rally hit a snag earlier this week. After shaking off NAND and DRAM pricing/demand concerns, Micron was faced with the end of it’s partnership with Intel. MU stock fell sharply on the news, as investors expressed concerns that Intel would could now source cheaper chips from China.
However, J.P. Morgan reiterated it’s “overweight” rating on MU yesterday. The brokerage firm stated that Intel/China fears were overblown. “Micron continues to have ownership rights to the developed technology for many years and any licensing agreement that Intel would enter into with a third party would have to be approved by Micron,” J.P. Morgan noted.
MU options traders took heart in the note, sending more than 182,000 contracts across the tape yesterday. Calls accounted for 76% of that volume. MU’s January 2018 put/call OI ratio reinforces this bullish backdrop, arriving at 0.66. While profit taking has had some impact on call trading, a rebound in MU stock should drive this ratio lower once again.
Delta Air Lines, Inc. (DAL)
Delta stock flew the friendly skies yesterday, rallying nearly 5% in the wake of a sold fourth-quarter earnings report. For the quarter, Delta said earnings rose 17% to 96 cents per share, topping the Street’s view for 88 cents. Revenue increased 8% to $10.245 billion, also topping the consensus estimate for $10.16 billion.
Looking ahead, Delta raised its 2018 earnings guidance to $6.35-$6.70 per share, up from $5.35-$5.70. Analysts were expecting 2018 earnings of $5.75 per share.
Options volume was extremely brisk for DAL stock yesterday. More than 170,000 contracts changed hands, quintupling DAL’s daily average. Calls were responsible for 72% of that volume. As a result, the February put/call OI ratio fell to 0.91 from a reading north of 1.0 roughly a month ago.
As of this writing, Joseph Hargett was long on Micron Technology, Inc. (MU) stock.
