U.S. stock futures are trading broadly higher this morning. Wall Street has once again pushed trade-war fears to the back burner in favor of U.S. economic data. Today, we get reports on July home prices and September consumer confidence.
Furthermore, the Federal Open Market Committee meeting starts today. Investors will be keeping a close eye on Fed Chair Jerome Powell’s comments for indications on the economy and the impact of trade tensions. Wall Street is expecting a rate hike of a quarter basis point tomorrow to 2.25%.
Heading into the open, futures on the Dow Jones Industrial Average are up 0.18% and S&P 500 futures are higher by 0.15%. Nasdaq-100 futures have added 0.02%.
In the options pits, volume fell off sharply on Monday. Only about 17.2 million calls and 14.1 million puts changed hands on the session — well below average. On the CBOE, the single-session equity put/call volume ratio extended its recent gains, coming in at 0.63. The 10-day moving average held at 0.58, however, a four-week low.
Options traders loaded up on General Electric (NYSE:GE) calls as the stock tumbled to nine-year lows. Meanwhile, Snap (NYSE:SNAP) calls were popular following an Amazon.com (NASDAQ:AMZN) deal. Finally, Amarin Corporation (NASDAQ:AMRN) volume skyrocketed on a positive fish oil capsule trial for heart patients.
Let’s take a closer look:
General Electric (GE)
General Electric’s recovery has been far from problem free. In the latest blow to investors, GE customer Exelon (NYSE:EXC), found an “oxidation issue” with GE turbine fans at two Texas plants. Both plants had to be shut down as a result.
GE CEO Russell Stokes called the issue a “teething” problem typical with new equipment. Still, the problem remains a blemish on GE’s troublesome turnaround plans.
GE stock dropped more than 3.5% on the news, but options traders heavily favored calls following the plunge. Volume soared to 404,000 contracts, coming in at more than double GE’s daily average. Calls gobbled up 68% of the day’s take.
The call attention stands in stark contrast to GE’s October options backdrop. Currently, the October put/call open interest ratio comes in at a lofty 2.25. In other words, puts are more than twice as popular as calls in the front-month options series for GE.
Shares of the struggling social media firm were boosted early in yesterday’s session after Snap announced a partnership with Amazon. Per the deal, Snapchat users will be able to take a picture of a product or barcode and see shopping results for that item on Amazon. Despite the early gains on the news, SNAP stock still finished down more than 2% on Monday.
Options traders appeared hopeful, however. Volume on SNAP rose to 145,000 contracts, or about 1.5 times the stock’s daily average options activity. Calls claimed 64% of the day’s take.
Overall, SNAP options traders are divided on the shares. The October put/call OI ratio rests at 1.09, with puts and calls in near parity. Peak OI for both puts and calls lies at the $10 strike, totaling more than 50,000 contracts each. SNAP is currently trading near its lowest point since going public.
Amarin Corporation (AMRN)
Fish oil is potentially big business. Amarin announced yesterday that its fish oil capsule Vascepa showed considerable benefits for heart patients in a clinical trial. Compared to a placebo, Vascepa significantly reduced the risk of serious cardiovascular events in trial results involving 8,179 statin-treated adults.
“We are delighted with these topline study results,” said John Thero, president and CEO of Amarin.
AMRN stock surged more than 300% following the news, sending options traders scurrying for calls. Volume vaulted to 130,000 contracts, or more than 8 times AMRN’s daily average. Despite the rally, only about 57% of the activity yesterday was call related.
In the front-month October series, we see a considerable call biase for AMRN. The put/call OI ratio comes in at 0.59. That said, peak call OI still rests well below AMRN’s Monday close at $12.40. AMRN is hovering just below the last bastion of significant call OI at $13, totaling about 2,700 contracts.
As of this writing, Joseph Hargett held no positions on any of the aforementioned securities.