Wednesday was another flat session for stocks, as the major market indices dithered near annual highs. Smelling uncertainty on the wind, options traders backed away from their recent obsession with calls, sending the CBOE put/call volume ratio to a one-week high of 0.64.
Among the top 10 most active stocks in the options pits were General Electric Company (NYSE:GE), McDonald’s Corporation (NYSE:MCD) and BlackBerry Ltd (NASDAQ:BBRY). We’ll look to see what that options activity means for GE, MCD and BBRY.
General Electric Company (GE)
Shares of General Electric jumped 2% on Wednesday to close above their 200-day moving average for the first time since early December. The stock was touted as a “buy” by Pete Najarian on CNBC’s Fast Money Final Trade yesterday, with Najarian citing increased insider buying and activity.
Najarian himself said he purchased GE calls on Tuesday, likely providing fuel for the fire in GE’s options pits on Wednesday. Overall, GE option volume was heavy yesterday, with 334,443 contracts trading on the stock. Some 76% of this activity crossed on the call side.
Premarket trading was flat for GE stock, though near the end of Wednesday’s trading, shares had pulled back toward their 200-day moving average.
McDonald’s Corporation (MCD)
The Golden Arches have been front and center for many investors since the company announced the retirement of three-year veteran at the helm CEO Don Thompson. According to InsiderMonkey.com, a number of hedge funds have taken aim at MCD stock since the news, with invested parties rising from 69 in the third quarter to 75 in the fourth.
While headline news doesn’t appear to have driven the yesterday’s spike, MCD stock jumped nearly 4% on Wednesday. Technical trading was the likely culprit, with MCD breaking above its 200-day moving average for the first time since November. The next potential area of resistance for MCD stock lies at the century mark.
Options activity was impressively bullish on Wednesday, with 91% of the 306,601 contracts in volume trading on the call side. Current open interest appears extremely speculative, with more than 1,000 contracts residing at the weekly Feb. 27 series $99, $99.50 and $100 call strikes. These options expire at the end of this week.
BlackBerry Ltd (BBRY)
The once king of business smartphones, BlackBerry, made a deal with Google Inc. (NASDAQ:GOOG, NASDAQ:GOOGL) this week that could be a game changer for the company. Specifically, BlackBerry announced a partnership with Google to provide enterprise mobility for Android devices. As a result of the deal, BlackBerry gains access to a much broader swath of the mobile market, while Google get to boost security within its enterprise Android market.
BBRY stock jumped more than 2% following the news yesterday, and the shares are up nearly another 2% in pre-market trading this morning. At last check, BBRY was trading just shy of former resistance at $11.
Options traders took the news in stride, sending 85,656 contracts across the tape on BBRY stock. Roughly 78% of this volume traded on the call side of the tape, resulting in open interest of 8,082 contracts at the 10.5 call strike and 7,296 contract at the 11 call strike in the weekly Feb. 27 series.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
