U.S. stock futures are trading broadly higher this morning. Wall Street found its feet after a Federal Reserve report to Congress signaled just three interest rate hikes this year, not the four many had feared. However, there are a slew of Fed speakers this week, including new Fed Chairman Jerome Powell’s comments in front of Congress.
Wall Street is looking at the positive, though. At last check, Dow Jones Industrial Average futures were up 0.53%, S&P 500 futures were higher by 0.36% and Nasdaq-100 futures had gained 0.36%.
Turning to the options pits, volume remained below average on Friday. Overall, about 18.3 million calls and 16.5 million puts changed hands on the session. The CBOE single-session equity put/call volume ratio ticked lower to 0.62. The 10-day moving average slipped to 0.65 – another in a string of two-week lows.
Taking a closer look at Friday’s options activity, Apple Inc. (NASDAQ:AAPL) call volume rose amid speculation on Spring product announcements. Amazon.com, Inc. (NASDAQ:AMZN) drew mixed activity as $1,500 milestone falls. Micron Technology, Inc. (NASDAQ:MU) call buyers emerge amid bull rally.
Apple Inc (AAPL)
Speculation is rising on the coming Spring product launches from Apple. Financial blogs are already hinting that the much anticipated AirPower wireless charging mat will arrive in the second half of March. Furthermore, revamped AirPods are also expected to arrive next month. Finally, there are rumors than an iPhone SE revamp and an upgraded Apple TV are in the works.
Options traders love speculation, but Apple stock just isn’t seeing the same level of pre-product activity as usual. On Friday, volume came in at 495,000 contracts, just shy of AAPL’s daily average. Calls also made up a below-average 60% of the day’s take.
In fact, March options, which should benefit from this speculation directly, are heavily weighted toward puts. Currently, the March put/call open interest ratio rests at 0.94, with puts and calls in near parity. This ratio is also in the upper 10% of all those taken in the past year, signaling considerable bearish sentiment from the options crowd.
Amazon.com, Inc. (AMZN)
Amazon stock topped $1,500 on Friday for the first time ever. The shares are poised to push past this psychologically significant hurdle again today, potentially closing at a fresh all-time high. AMZN stock is up more than 28% so far this year, easily outstripping it’s peers in the Nasdaq and the S&P 500.
The breakout has brought with it a heavy degree of speculation from AMZN options traders. On Friday, volume rose to over 161,000 contracts. Call made up 57% of the day’s take, which is above average for Amazon stock.
Looking out to March options, however, we find a considerable degree of pessimism. The March put/call OI ratio comes in at 1.10, with puts firmly in command. Given this data, Friday’s activity may have been a sign of profit taking from options traders. With AMZN breaking above $1,500 this morning, profit taking may be premature at this point.
Micron Technology, Inc. (MU)
Micron is another tech stock that has made significant strides higher since the market correction. MU stock has enjoyed a valuation rally since bottoming near $38 on Feb 9. The shares jumped more than 5% on Friday, and are up about 1.2% so far in pre-market trading. Given this momentum, Micron stock could challenge $50 within the next week.
MU stock options traders are betting on just that. Volume on Friday rose to 392,000 contracts, or nearly double Micron’s daily average. Calls gobbled up 73% of the day’s take.
Most notably, Trade-Alert.com reports that a block of more than 9,600 April $50 calls traded on Friday for the ask price of $1.90, or $190 per contract. Breakeven on this trade lies at $51.90, with a double near $54.
As of this writing, Joseph Hargett was long Micron (MU) stock.
