Thursday’s Vital Data: Facebook, AT&T and General Electric

Stock Market

U.S. stock futures are hovering just above break even this morning. Wall Street bears are taking a break from selling to reassess the current trade situation. The lull comes, in part, after President Trump backed away from banning Chinese investment in U.S. tech firms. However, many analysts believe the U.S.-China trade war could flare up considerably at any time.

Heading into the open, futures on the Dow Jones Industrial Average are up 0.06%. Meanwhile, S&P 500 futures have added 0.10% and Nasdaq-100 futures have risen 0.12%.

In options activity, volume was pretty average despite the heavy market volatility. Overall, about 19.4 million calls and 17.7 million puts changed hands yesterday. On the CBOE, the single-session equity put/call volume spiked to 0.67 —  a near two-month high. The activity pushed the 10-day moving average higher to 0.57.

Options traders were focused on story stocks yesterday. Facebook (NASDAQ:FB) was among the most popular after lifting its ban on cryptocurrency advertisements.

Elsewhere, options activity was split on AT&T (NYSE:T) after it announced it is squeezing more out of subscribers by lifting it’s administrations fees. Finally, General Electric (NYSE:GE) options rallied again after Athene Holding (NYSE:ATH) expressed interest in buying GE’s long-term care insurance business.

Let’s take a closer look:

Thursday’s Vital Options Data: Facebook, AT&T Inc and General Electric Company

Facebook (FB)

Facebook reversed course yesterday, lifting its ban on cryptocurrency advertisements. The news was cheered by FB options traders, though FB stock succumbed to broad-market selling pressure. What’s more, Facebook’s shift renewed speculation that the company was looking to make an acquisition in the cryptocurrency market — possibly Coinbase.

FB options traders ran with those rumors. Volume rose to 178,000 contracts, with calls gobbling up 70% of the day’s take — well above FB’s normal call activity. And there is more room on the bullish bandwagon. Specifically, FB’s July put/call open interest ratio comes in at 0.74, with calls barely clinging to a majority.

Peak July call OI for the series lies at $205, with speculators anticipating a quick turnaround for FB stock. Naysayers, however, have piled into puts at the $185 strike.

AT&T (T)

AT&T found a way to make about $800 million more a year. It has raised its administration fees on wireless customers by about $1.23 each. AT&T may be looking for more sources of revenue after increasing its net debt to more than $60 billion by acquiring Time Warner.

“Presumably the administrative fee is another way to help AT&T fund its network build and Time Warner acquisition going forward,” BTIG Research told CNBC.

T stock barely noted the news, and T options traders remained divided on the shares. Volume came in at 149,000 contracts on Wednesday, with calls and puts split down the middle.

Taking a look at July open interest, we see similar activity. The July put/call OI ratio comes in at 0.96, with calls and puts also in parity. That said, we can’t read too much into T’s options sentiment backdrop right now, as many contracts out there are left over from arbitraging the Time Warner buyout.

General Electric Company (GE)

The fire sale at GE may still be on. After announcing it was spinning off its health care division and selling its Baker Hughes (NYSE:BHGE) holdings, GE may now be looking to sell it’s long-term care insurance business. Athene is reportedly looking to acquire the business, though details are being kept under wraps. Neither GE nor Athene have commented on the report.

GE options traders had plenty to say, piling into calls for another consecutive session. Volume soared to 462,000 contracts, with calls claiming 68% of the day’s take. The recent call attention has had a considerable effect on short-term GE options.

Specifically, the July put/call OI ratio plunged overnight from 1.32 yesterday to 1.10 today. That’s a considerable amount of new bullish call positions, and could be a sign that traders believe GE has finally bottomed.

As of this writing, Joseph Hargett held no positions on any of the aforementioned securities.


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