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U.S. stock futures are pointed sharply lower this morning, as Wall Street came back from the Martin Luther King Jr. holiday in a selling mood. Comments from President-elect Donald Trump on China and the U.S. dollar helped spur the selloff, as Trump told The Wall Street Journal that the dollar was “too strong” due to China manipulating the yuan.
Adding fuel to the fire, British Prime Minister Theresa May is said to be pushing for a “hard Brexit” from the EU.
Against this backdrop, futures on the Dow Jones Industrial Average have fallen 0.41%, S&P 500 futures have shed 0.51% and Nasdaq-100 futures are down 0.52%.
On the options front, Friday’s volume was brisk heading into the three-day weekend. Overall, roughly 15.4 million calls and 13.4 million puts crossed the tape on Friday. Over on the CBOE, the single-session equity put/call volume ratio whipsawed to 0.63 from Thursday’s one-week high of 0.68, while the 10-day moving average held steady in two-month high territory at 0.67.
Turning to Friday’s volume leaders, Facebook Inc (NASDAQ: FB ) call volume received a pre-earnings boost from Raymond James, which upgraded the stock to “strong buy.” Elsewhere, T-Mobile US Inc (NASDAQ: TMUS ) saw call volume ramp up amid the FCC’s spectrum auction, which has led to increased speculation on merger activity in the telecom sector. Finally, Tesla Motors Inc (NASDAQ: TSLA ) was also call heavy after the company detailed its plans to charge for supercharging stations across the country.
Facebook Inc (FB)
Front-running the social media giant’s quarterly report, Raymond James lifted Facebook stock to “strong buy” from “outperform” on Friday.
According to a research note, social media ad spending was strong in the fourth quarter, with Raymond James stating that channel checks indicate an increase in ad spending of about 20% to 30%. The brokerage firm reasoned that Facebook should now easily hit ad growth estimates of 35%.
FB stock rallied 1.36% on the news, finally filling in November’s post-earnings gap lower. The combination of technical and fundamental strength pushed options traders toward FB call options in droves on Friday. Overall, Facebook saw volume reach over 962,000 contracts, with calls snapping up 70% of the day’s take.
Looking out to 3 Feb options, however, FB options bulls are still playing catchup. Currently, peak call open interest rests at the in-the-money $123 strike, totaling 9,800 contracts — well short of FB’s current perch north of $128. In the $128 region, there are roughly 3,400 contracts at each of the $129, $130 and $131 strikes in the 3 Feb. series, i.e., the one most affected by Facebook’s coming quarterly report on Feb. 1.