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Monday’s Vital Data: Apple Inc. (AAPL), Alibaba Group Holding Ltd (BABA) and Freeport-McMoRan Inc (FCX)

Options activity provides a look at expectations on AAPL, BABA and FCX

U.S. stock futures are trading broadly lower this morning, as the U.S. government shutdown enters its third day. The Senate is expected to hold a vote around noon today to fund the government through Feb. 8. It is unclear, however, if there is enough support to pass the measure.

Monday’s Vital Data: Apple Inc. (AAPL), Alibaba Group Holding Ltd (BABA) and Freeport-McMoRan Inc (FCX)Heading into the open, Dow Jones Industrial Average futures are down 0.22%, S&P 500 futures have fallen 0.08%% and Nasdaq-100 futures have slipped 0.05%.

Turning to the options pits, volume remained brisk on Friday. Overall, about 25.1 million calls and 17.6 million puts changed hands. The CBOE single-session equity put/call volume ratio held at 0.56. The 10-day moving average ticked higher to 0.56.

Taking a closer look at Friday’s options activity, Apple Inc. (NASDAQ:AAPL) saw an influx of call activity despite reports that it will cancel the iPhone X this summer. Elsewhere, Alibaba Group Holding Ltd (NYSE:BABA) and Freeport-McMoRan Inc (NYSE:FCX) were both call heavy heading into earnings reports within the next week.

Monday’s Vital Options Data: Apple Inc. (AAPL), Alibaba Group Holding Ltd (BABA) and Freeport-McMoRan Inc. (FCX)

Apple Inc. (AAPL)

According to a report obtained by AppleInsider, KGI Securities’ analyst Ming-Chi Kuo said that Apple will cancel the iPhone X this summer. Kuo reports that disappointing sales and lack of interest from Chinese consumers are the main drivers. If true, this would be the first one-generation iPhone cancellation since the iPhone 5C in 2014.

Apple options traders appeared to shake off the news given the influx of call volume on Friday. Volume topped 521,000 contracts, with calls accounting for 71% of the day’s take.

However, the February put/call open interest ratio rose to 0.66 this morning from Thursday’s reading of 0.61. In other words, AAPL options traders are taking profits and/or shifting toward February put options. Either way, this is a bearish indicator for Apple stock.

Alibaba Group Holding Ltd (BABA)

Chinese e-commerce giant is slated to release its third-quarter earnings report on Feb. 1. Wall Street is expecting a profit of about $1.65 per share on revenue of $12 billion. The earnings whisper comes in at $1.74 per share.

Alibaba stock options traders are already gearing up ahead of the event. Volume on Friday rose to 211,000 contracts, with calls making up 61% of the day’s take. Sentiment is quite bullish ahead of earnings. The weekly February 2 series put/call OI ratio arrives at 0.32, with calls more than tripling puts among options most affected by earnings.

February 2 implieds are pricing in a potential move of about 6.4% for BABA stock. This places the upper bound of the expected move at $196.79, with the lower bound resting at $173.21.

Freeport-McMoRan Inc. (FCX)

After surging to a multiyear high of $3.30 at the end of 2017, copper futures have trended lower in 2018. But the retreat has only stalled growth for Freeport-McMoRan stock. The shares are currently working through overbought conditions and may be ready to rally next week when the company reports fourth-quarter earnings.

FCX stock options traders certainly think so. Volume for Freeport rose to 242,000 contracts, or more than 2.5 times FCX’s daily average. Calls made up 83% of the day’s take.

Overall, the weekly Jan. 26 put/call OI ratio arrives at a bearish 1.50, with puts firmly in command. Implieds are pricing in a post-earnings move of 6.75%, placing the upper bound at $21.35 and the lower bound at $18.65.

Wall Street is currently looking for earnings of 49 cents per share on revenue of $4.53 billion. The earnings whisper rests at 51 cents per share.

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

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