U.S. stock futures are pointed sharply lower this morning, as falling oil prices add to the holiday hangover. Wall Street drifted higher on light volume during the Thanksgiving holiday week, but stocks are being brought back down to earth this morning, as traders return to their posts. What’s more, oil prices face continued uncertainty as hopes for an OPEC deal fade on Saudi Arabia concerns.
Heading into the open, futures on the Dow Jones Industrial Average are down 0.26%, with S&P 500 futures off 0.24% and Nasdaq-100 futures shedding 0.16%.
On the options front, Friday’s holiday-shortened session resulted in average daily volume being halved on the day. Only about 8.5 million calls and 6.6 million puts crossed the tape on Friday. Over on the CBOE, the single-session equity put/call volume ratio arrived at 0.61, while the 10-day moving average held at a three-month low of 0.60 for the third consecutive session.
Among Friday’s volume leaders, Apple Inc. (NASDAQ:AAPL) saw a fair amount of interest following a report that the company once again topped the smartphone market in terms of operating profit. Elsewhere, Facebook Inc (NASDAQ:FB) stock is being pressured following a wave of insider selling, and Qualcomm, Inc. (NASDAQ:QCOM) options traders flooded in during Friday’s holiday-shortened session to load up on calls ahead of today’s ex-dividend date.
Apple Inc. (AAPL)
According data from Strategy Analytics, a market research company, Apple accounted for an impressive 91% of the $9.4 billion in smartphone market operating profit during the third quarter of 2016. “Apple’s ability to maximize pricing and minimize production cost is hugely impressive, and the iPhone continues to generate monster profits,” the research company said.
However, this impressive performance could be a double-edged sword, hinting that Apple has limited room for growth in the market.
AAPL stock options volume remained robust throughout the Thanksgiving holiday week, with the shares attracting more than 371,000 contracts in Friday’s trading. Furthermore, much of the activity was on the bullish side, with calls accounting for 62% of Friday’s take. Looking at the weekly Dec 2 series, AAPL options traders have set their sights on the just out-of-the-money $112 strike, where nearly 13,000 contracts currently reside.
As for put traders, the $109 and $110 strikes have both attracted more than 7,000 contracts a piece, hinting at put spread activity in the Dec 2 series.
Facebook Inc. (FB)
Despite rebounding from multimonth lows, FB stock has seen an influx of insider selling pressure in recent weeks. Most notably, CEO Mark Zuckerberg sold about $95 million in FB stock two weeks ago, according to regulatory filings. The sales appear to be part of his effort to donate 99% of his wealth to charity.
Zuckerberg also sold $190 million in FB stock in October, selling another $190 million in September.
Charity or no, the insider selling appears to be having some impact on FB stock sentiment, especially in the options pits. On Friday, call volume remained well below average for FB stock, with calls only accounting for about 57% of the 252,000 contracts traded on the shares. FB’s average daily call volume typically accounts for 64% to 65% contracts traded.
Furthermore, the November/December put/call open interest ratio has risen in the past week to a perch near 0.91, with puts in near parity with calls, signaling a fair amount of skepticism for FB stock.
Qualcomm, Inc. (QCOM)
What would prompt Qualcomm options traders to forgo Black Friday shopping to send record short-term volume across the tape? Dividends, of course. QCOM stock trades ex-dividend today, meaning that shareholders of record as of the close on Friday are eligible for a quarterly dividend of 53 cents per share, payable on Dec. 16.
So, in order to snap up those tasty QCOM dividends, options traders flooded the stock with calls on Friday.
In fact, calls accounted for a whopping 96% of the more than 513,000 contracts traded on the stock. Among the most active dividend contracts was the weekly Dec 2 $71 call, which now sports OI of more than 10,000 contracts following Friday’s activity.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
