Thursday saw a slight bullish bias for the major market indices, with the Nasdaq Composite leading the way with a gain of 0.4% to finish at a record close of 5,056.06, while the S&P 500 rose 0.24%. On the day, a string of strong earnings reports and better-than-expected jobless claims were offset of a larger-than-expected decline in the U.S. Purchasing Managers Index. Options traders picked up on the trepidation, as the CBOE’s put/call volume ratio jumped to a one week high of 0.66. The 10-day moving average held at 0.62.
AT&T Inc. (NYSE:T) impressed investors with strong subscriber growth and better-than-expected first-quarter earnings, while General Motors Company (NYSE:GM) was beaten lower following a . Finally, Amazon.com, Inc. (NASDAQ:AMZN) attracted record short-term options volume ahead of its .
Amazon.com, Inc. (AMZN)
With Amazon’s first-quarter report slated for after the close last night, options speculators appeared somewhat divided. Volume totaled 171,558 contracts, with only about 55% of that volume crossing on the call side. The weekly April 24 series $420 strike was the target for many traders, with open interest swelling to 4,440 contracts. The deep out-of-the-money April $450 and $460 strikes were also targeted, with open interest totaling more than 3,000 contracts at each.
In after-hours trading Thursday, AMZN stock soared more than 9%, making yesterday’s call activity out to be smart money. It looks even better when you consider that Amazon is up 12% in Friday’s premarket activity.
Amazon posted a loss of 12 cents per share for the quarter, edging past Wall Street’s target for a loss of 13 cents per share. Revenue was considerably better, however, jumping 15% to $22.72 billion and quelling many concerns about Amazon’s slowing growth.
The real bright spot for AMZN traders was the company’s Web Services unit, which saw sales soar 49% year-over-year to $1.57 billion on operating income of $265 billion.
AT&T Inc. (T)
Shares of communications giant AT&T rallied more than 4% on Thursday, as investors took heart in the company’s strong first-quarter earnings report. AT&T reported earnings of 63 cents per share, a penny ahead of the consensus estimate, while revenue came in at $32.5 billion. Wireless subscriber growth was a bright point for AT&T, with the firm adding 1.2 million subscribers during the quarter. AT&T also said it expects to close its acquisition of Direct TV (NASDAQ:DTV) during the second quarter.
On the day, T stock saw volume of 289,243 options contracts, with 59% of the activity trading as calls. In the weekly April 24 series of options, traders zeroed in on the now in-the-money $34 strike, with open interest of 20,577 contracts. The deeper in-the-money April $24 series also saw considerable attention, sporting open interest of 16,838 contracts. The April $24 series options expire at the close of trading today.
In premarket trading, T stock was up slightly, looking to extend yesterday’s rally.
General Motors Company (GM)
GM traders had a fight on their hands yesterday, as the stock fell 3.34% to trade at its lowest point since early February. The U.S. automaker reported significant growth in earnings, which came in at 86 cents per share, but the figure . Revenue was also light, arriving at $35.7 billion versus the consensus estimate for $37.61 billion. There were a few bright spots, however, as pickups and SUV sales were strong stateside, leading GM to earn $2.18 billion in North America.
Picking up on a potential overreaction by the broader market, GM options traders piled into calls on Thursday. Volume totaled 129,097 contracts for GM stock, with 70% of that activity crossing as call options. Looking out to May monthly contracts, peak GM call open interest resides at the just overhead $36 strike, where 9,683 contracts currently reside. Adding a bit of speculation to the backdrop, more than 7,700 contracts are open at each of the $37 and $38 May call strikes, while another 5,099 contracts call the May $40 call strike home.
Heading into the open, GM stock has a slight positive bias, trading up at $35.95 at last check.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
