U.S. stock futures are trading broadly higher this morning, putting the Dow on course for its fourth-consecutive win in a row.However, inflation data is on tap later this morning. The consumer price index (CPI) is expected to rise 0.4%, with core CPI up 0.2%. Strong numbers here could put a dent in today’s positive mood.
Heading into the open, Dow Jones Industrial Average futures are up 0.56%, S&P 500 futures have added 0.44% and Nasdaq-100 futures are higher by 0.47%.
Turning to the options pits, volume fell off dramatically on Tuesday. Only about 14.5 million calls and 14.1 million puts changed hands on the session, roughly halving daily activity from the past week. The CBOE single-session equity put/call volume ratio retreated to 0.73. The 10-day moving average hit another six-month high at 0.71.
Taking a closer look at yesterday’s options activity, Twitter Inc (NYSE:TWTR) calls spiked even as CEO Jack Dorsey downplayed acquisition rumors. Meanwhile, Cisco Systems, Inc. (NASDAQ:CSCO) options traders geared up for earnings. Apple Inc. (NASDAQ:AAPL) CEO Tim Cook dashed hopes for a special dividend on overseas cash.
Twitter Inc (TWTR)
Twitter stock has been on fire in the past month. Earnings were a large part of the stock’s price action, but rumors Twitter was looking for a suitor were also a significant driver. Yesterday, however, CEO Jack Dorsey downplayed acquisition talks.
“I’ve always thought that there’s a lot of strength to our independence. We can work on every device. We can work through any medium,” Dorsey said at the Goldman Sachs Technology and Internet Conference.
Despite the denial, Twitter stock options traders continued to pile into calls. Volume on Tuesday rose to 208,000 contracts, with calls making up 71% of the day’s take. The March open interest configuration is far from call saturated, as well. The back-month put/call OI ratio arrives at 0.71, near the midpoint of its annual range.
However, some of this recent call activity is likely related to rising short interest on TWTR stock. In fact, short interest has risen from a total of $911 million in total positions to $1.3 billion since the beginning of the year, according to S3 Partners. That’s the eighth-largest short position in Twitter’s sector.
Cisco Systems, Inc. (CSCO)
Cisco Systems might be handing out valentines tonight. The company is slated to release its second-quarter earnings report after the close today. Analysts are expecting a profit of 59 cents per share on revenue of $11.81 billion. The whisper number arrives at 60 cents per share.
Options traders are pricing in a potential post-earnings move of about 4.23% for CSCO stock. The upper bound lies at $43 and the lower at $39.50.
Cisco stock options traders are also leaning toward the bulls’ camp ahead of earnings. The February put/call OI ratio currently comes in at 0.66, with calls on the verge of doubling puts among options most affected by tonight’s earnings.
Apple Inc. (AAPL)
If you were hoping to score a dividend from that sweet overseas cash that Apple has been hoarding … you’re likely out of luck. CEO Tim Cook said at the company’s annual shareholder meeting yesterday that a special dividend is unlikely. “Special dividends, I’m not really a fan of,” Cook said in response to questions on how Apple would spend the $285 billion is has stashed away.
However, all is not lost for Apple stock holders. Cook went on to say, “In terms of annual increases in the dividend, it is something that this board and management are committed to doing.”
Apple stock options traders appeared okay with the response, and more okay with AAPL’s recent rebound. More than 418,000 contracts traded on Apple stock yesterday. Calls made up 58% of the day’s take. While this call activity is well below average, it is higher than most readings taken since the start of the correction last week.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.