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Friday’s Vital Data: Bed Bath & Beyond, Apple and Freeport-McMoRan

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

U.S. stock futures are traveling northbound this morning. Heading into the open, futures on the Dow Jones Industrial Average are popping just under 0.97%, and S&P 500 futures are higher by 0.95%. Nasdaq-100 futures have added 1.05%.

Source: Shutterstock

In the options pits, call trading led the way Thursday while overall volume settled near average levels. Specifically, about 17 million calls and 14.8 million puts changed hands on the session.

Meanwhile, at the CBOE, the single-session equity put/call volume ratio rose slightly to 0.62. The 10-day moving average is being pulled lower and now stands at 0.725.

Options traders zeroed in on analyst actions and corporate news Thursday. Bed Bath & Beyond (NASDAQ:BBBY) rocketed to the moon after finally getting a new CEO. Apple (NASDAQ:AAPL) notched a new 52-week high amid widespread optimism on iPhone 11 demand. Finally, Freeport-McMoRan (NYSE:FCX) scored a much-needed upgrade.

Let’s take a closer look.

Bed Bath & Beyond (BBBY)

Source: ThinkorSwim

Source: ThinkorSwim

Bed Bath & Beyond shares rocketed 22% higher Thursday and are up another 3.8% in pre-market trading. The ailing home goods retailer finally announced a new president and CEO, Mark Tritton. Previously, Tritton was an executive at Target (NYSE:TGT), which has flourished in recent years. Investors are obviously enthusiastic over the pick with high hopes the new blood will spark a much-needed turnaround.

Since peaking in 2013 at $80.82, BBBY stock has fallen as much as 91%. While much work remains before the long-term downtrend reverses, the stock is now trending above a rising 20-day and 50-day moving average, so buyers have wrested control for now.

The news lit a fire in options trading. Total activity zipped to almost five times the average daily volume, with 124,647  contracts crossing the table. Calls accounted for 51% of the tally.

Implied volatility dropped to 64%, placing it at the 32nd percentile of its one-year range. Premiums are pricing in daily moves of 49 cents or 4.1%.

Apple (AAPL)

Source: ThinkorSwim

Source: ThinkorSwim

Apple stock jumped to a new 52-week high Thursday and is a whisper away from last year’s record peak. The tech titan has held firm during the market’s recent temper tantrum and remains a go-to stock for strength seekers. Robust demand for the latest iteration of its iPhone is driving much of the enthusiasm. Just last week, Apple requested iPhone 11 suppliers increase production by some 10% or 8 million phones.

In response, many analysts have increased their price targets to at much as $260, while upgrading their stock rating. The technicals for AAPL stock remain rock solid with a price trend that points higher across all time frames.

On the options trading front, traders favored call options by a modest margin. Activity crept to 109% of the average daily volume, with 574,031 total contracts traded. Calls claimed 55% of the session’s sum.

Implied volatility pushed to 34% or the 47th percentile of its one-year range. It will likely stay bid ahead of the company’s looming earnings announcement. Premiums are baking in daily moves of $4.91 or 2.1%.

Freeport-McMoRan (FCX)

Source: ThinkorSwim

Source: ThinkorSwim

Freeport-McMoRan shares received a rare bit of love on Thursday. And investors latched onto the affection. The mining giant surged almost 5% amid huge volumes. Over 61.8 million shares traded, or roughly three times the usual volume.

Andreas Bokkenheuser, an analyst at UBS, upgraded FCX stock from “neutral” to “buy” while updating his price target from $13 to $12. Falling copper prices due to angst over the trade war have weighed on the stock, but the pessimism seems overdone. Bokkenheuser is forecasting a rebound in copper over the next few years, and that should boost FCX.

As far as options trading goes, calls ran the tables driving 68% of the day’s take. Activity grew to 190% of the average daily volume, with 96,827 total contracts traded.

With earnings just around the corner on Oct. 23, implied volatility is running hot. It jumped to 56% and now sits at the 64th percentile of its one-year range. Flush premiums make short options strategies an attractive proposition here.

As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. For a free trial to the best trading community on the planet and Tyler’s current home, click here

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