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Tuesday’s Vital Data: General Electric Company (GE), Tesla Inc (TSLA) and CBS Corporation (CBS)

Joseph Hargett

U.S. stock futures are trading lower this morning, as investors keep an eye on Washington, D.C. and House Republicans’ progress on their tax plan. Skittishness is also being driven by all-time-high valuations across the board on Wall Street, with many traders unable to shake the feeling that a pullback is on the horizon.

stock market today

At last check, Dow Jones Industrial Average futures were down 0.18%, S&P 500 futures had lost 0.21% and Nasdaq-100 futures had dipped 0.1%.

On the options front, volume was below average as only about 15.3 million calls and 12.8 million puts crossed the tape. On the CBOE, the single-session equity put/call volume ratio rose to a two-week high of 0.69, with the 10-day moving average held at 0.64.

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As for Monday’s options activity, General Electric Company (NYSE:GE) drew considerable ire in the wake of its restructuring plan — which includes a 50% dividend cut.

Meanwhile, Tesla Inc (NASDAQ:TSLA) sentiment began to shift back toward call options ahead of Thursday’s semi-truck unveiling. Finally, CBS Corporation (NYSE:CBS) drew arbitrage activity after announcing a $900 million senior note offering.

Tuesday’s Vital Options Data: General Electric Company (GE), Tesla Inc (TSLA) and CBS Corporation (CBS)

General Electric Company (GE)

Investors did not like what GE brought to light yesterday. The company is spinning off its lighting and locomotive businesses to focus on power, aviation and healthcare equipment.

GE also said it was looking at cutting jobs across all of its businesses. However, it was the company’s decision to slash its dividend by 50% to 12 cents per share that really sent investors running for the sidelines.

GE stock fell more than 7% on the news, driving mixed activity in the options pits. Options volume topped 1.1 million, numbering more than three times GE’s daily average. Call options narrowly edged out puts, claiming 53% of the day’s take, but many of these contracts were sold.

For instance, data from Trade-Alert.com reveals that blocks totaling 110,000 contracts traded at both the Dec $22 and Nov $22 call strikes. All of these contracts crossed at the bid price, ranging between 7 cents and a penny.

Tesla Inc (TSLA)

Tesla scored a price target increase from RBC Capital Markets yesterday. The brokerage firm lifted its target to $340 ahead of Tesla’s Thursday unveiling of its new automated semi-truck.

RBC highlighted the truck’s potential for lower maintenance costs and better fuel efficiency.

TSLA stock has been down lately due to missed Model 3 production targets. But, heading into Thursday’s event, TSLA is rebounding from its recent lows, gaining more than 4% on Monday.

Options traders remain wary, however. Volume on Monday 192,000 contracts, with calls only accounting for 56% of the day’s take. Furthermore, speculative traders are actually quite negative on TSLA ahead of this week’s unveiling.

For instance, the November put/call open interest ratio currently rests at 0.92, which is near the upper 10% of all readings taken this year.

CBS Corporation (CBS)

CBS stock has spent most of November rebounding from a poor showing in the earnings confessional. The shares had come back quickly, but yesterday’s news of a $900 million senior note offering pushed CBS stock nearly 1.5% lower on the session.

Additional debt was not a concern CBS investors needed to deal with at this point, especially with CBS stock being pressured by its declining 50-day moving average.

Options activity surrounding such events is typically related to arbitrage. It explains why CBS saw volume spike to nearly five times its daily average at 293,000 contracts. Volume was also split nearly evenly between puts and calls.

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

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