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Monday’s Vital Data: Bank of America Corp (BAC), Micron Technology, Inc. (MU) and Snap Inc (SNAP)

Joseph Hargett

U.S. stock futures are bouncing around breakeven this morning, as Wall Street tries to find its footing after last week’s heavy losses. News of White House Chief Strategist Steve Bannon’s firing late on Friday brought more questions as to whether President Donald Trump will still be able to push through his economic agenda. Additionally, Trump is scheduled to speak later tonight about the U.S.’s new strategy in Afghanistan.

Monday’s Vital Data: Bank of America Corp (BAC), Micron Technology, Inc. (MU) and Snap Inc (SNAP)

Against this backdrop, Dow Jones Industrial Average futures are off 0.07%, Nasdaq-100 futures have shed 0.04%% and S&P 500 futures have slipped 0.06%.

On the options front, caution flooded the market on Friday, as about 19.3 million calls and 21.2 million puts changed hands on the session. On the CBOE, the single-session equity put/call volume ratio leapt to 0.82, driving the 10-day moving average to a fresh four-month high of 0.76.

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Diving into Friday’s options activity, Bank of America Corp (NYSE:BAC) puts piled despite the banking giant settling it’s bond rigging suit for a mere $17 million in federal court. Elsewhere, Micron Technology, Inc. (NASDAQ:MU) announced a new semiconductor R&D facility in Boise, Idaho, while Snap Inc (NYSE:SNAP) drew a flood of call options after logging its best week ever with a 19.4% gain.

Monday’s Vital Options Data: Bank of America Corp. (BAC), Micron Technology, Inc. (MU) and Snap Inc (SNAP)

Bank of America Corp (BAC)

Bank of America became one of the first of 10 banks to settle in litigation for engaging in a “brazen conspiracy” to rig the market for U.S. dollar-denominated supranational, sub-sovereign and agency (SSA) bonds. While the deal still requires approval from a U.S. federal court judge, BofA has agreed to pay just $17 million for its part in manipulating the $9 trillion bond market during the past decade. If approved, the settlement could be a major win for Bank of America, as the penalties could have been much harsher.

BAC options traders also appeared to cheer the win, as calls made up 60% of the more than 236,000 contracts that traded on Friday. That optimism has carried through to the September series for BAC, as the put/call open interest ratio for the now front-month series arrives at 0.60, with calls easily outnumbering puts. For now, peak call OI totals 167,000 contracts at the overhead $25 strike, with the $24 strike is a close second at 121,000 contracts.

Micron Technology, Inc. (MU)

Micron Technology isn’t letting fears of rising DRAM prices slow down its expansion. The company announced on Friday that it was opening a new R&D facility in Boise, Idaho that will double its cleanroom space in the area. The news was yet another positive sentiment boost for MU stock, and options traders are running full steam ahead, with calls making up 72% of the more than 212,000 contracts traded on MU on Friday.

Diving into that activity reveals a wealth of large block call contracts on MU. According to Trade-Alert.com, a block of 40,000 Sep $33 calls traded for the ask of 46 cents, or $46 per contract, late on Friday, while a pair of 10,000 contract blocks traded on the Sep 1 $30 strike and the expiring August $30 strike. This last pair appears to have been a rollout of an existing position. The bottom line, however, is that MU options traders are blowing off the stock’s recent poor price action in favor of a more bullish, short-term outlook.

Snap Inc (SNAP)

After suffering heavy losses in the wake of its poorly received quarterly earnings report, SNAP stock proceeded to bounce back sharply from heavily oversold levels last week. In fact, SNAP gained roughly 19.4% last week, logging its best weekly gain since its IPO. The ball started rolling when Snap’s lockup period expired, and the anticipated wave of related selling pressure failed to materialize. Then, both Cantor Fitzgerald and Aegis issued bullish notes on SNAP stock, providing additional ballast for the shares.

Finally, a report that Snapchat Discover reportedly attracted nearly 30 million unique viewers in its first month capped off the week, pushing SNAP stock above $14 for the first time in nearly a month.

The rally clearly had a bullish effect on SNAP options activity, as Friday saw volume jump to 190,000 contracts, with calls making up 61% of the day’s take. What’s more, the September put/call OI ratio plummeted from a reading of 1.30 on Monday last week to today’s perch at 1.07 amid last week’s flood of call activity.

Peak call OI now totals more than 15,000 contracts at the overhead $15 strike, with about 12,000 Sep $14 strike calls set to open in the month later this morning.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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