FANG Stocks Help Lift Nasdaq to New Highs

Facebook Inc (FB), Amazon.com, Inc. (AMZN), Netflix, Inc. (NFLX), and Alphabet Inc (GOOGL) continue to trade near record highs

Mar 1, 2017 at 11:16 AM
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After a slight breather yesterday, stocks have surged back into record-high territory this morning following President Donald Trump's speech in front of Congress last night. Though the tech-heavy Nasdaq Composite (COMP) is lagging its peers on a percentage basis, it still hit an all-time peak of 5,886.12 earlier -- last seen trading up 0.9% at 5,879.50. The so-called "FANG" stocks are contributing to the COMP's upside, too, with shares of Facebook Inc (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX), and Alphabet Inc (NASDAQ:GOOGL) all gaining ground. Here's a closer look at how FANG stocks have been performing of late, and how options traders have been placing their bets.

Facebook Shares Near New High Ahead of Snap IPO

FB is 0.8% higher at $136.61 ahead of tomorrow's IPO from Snapchat parent Snap Inc. -- just a chip-shot away from its Feb. 27 record high of $137.18. Longer term, the stock has surged 18.7% in 2017, with its 10-day moving average serving as recent support. Options traders have been betting on more gains for Facebook Inc, too. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 161,447 FB calls have been bought to open in the past two weeks, compared to 81,836 puts. The resultant call/put volume ratio of 1.97 ranks in the elevated 82nd annual percentile, meaning calls have been bought to open over puts at a faster-than-usual clip. The stock's weekly 3/3 140-strike call has seen one of the largest rises in open interest in the last two weeks, with 11,078 contracts added. Trade-Alert suggests a number of these were bought to open, meaning options traders are betting on new highs for FB stock by week's end, when the series expires.

Options Traders Buy Puts as Amazon Hovers Near Record Highs

AMZN is shrugging off Tuesday's S3 technical issues, with the shares up 0.7% at $851.37. The stock recently pulled back after hitting an all-time peak of $860.86 last Thursday, but found a foothold in the $840-$850 region, home to its previous highs. Nevertheless, options traders have bought to open puts over calls at a slightly faster-than-usual clip in recent weeks, per AMZN's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.97, in the 65th annual percentile. More telling is the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.18, which is ranked higher than 81% of all comparable readings taken in the past year. Simply stated, short-term speculators are more put-skewed than usual. In the front-month series, peak open interest is docked at the March 830 put, and data shows the majority of positions were bought to open. Considering Amazon.com, Inc. is up 47% year-over-year, some of this activity could be a result of shareholders protecting paper profits against a near-term slide.

Netflix Stock Trendlines On Cusp of a Golden Cross

NFLX stock is trading up 0.4% at $142.69, bringing its year-to-date advance to 15.3%. The shares have pulled back slightly after notching a record high of $145.95 on Feb. 13, though the stock's 20-day moving average has emerged as a steady layer of support. What's more, NFLX's 10- and 20-day trendlines appear on the cusp of forming a golden cross, suggesting another floor could be in place. Regardless, options traders have been purchasing puts relative to calls at a near-annual-high clip in recent weeks, as evidenced by the stock's 10-day put/call volume ratio of 0.97 at the ISE, CBOE, and PHLX -- in the 91st percentile of its annual range. While the now-expired weekly 2/24 series saw the bulk of the action in recent weeks, buy-to-open activity has been detected at Netflix, Inc.'s weekly 3/3 140-strike put. While "vanilla" put buyers are betting on the stock to breach $140 by this Friday's close, stockholders could be using the puts in a more protective manner.

Skepticism Picks Up as Google Shares Bounce

GOOGL is 1.1% higher to trade at $854.44, after the company said YouTube will offer a live TV streaming service. The stock is up 8% in 2017 -- and has added 5% since bouncing off its 40-day moving average in early February, effectively filling a late-January earnings-induced bear gap. In the options arena, speculative players have initiated long puts relative to calls at nearly the fastest clip of the year during the last 10 weeks. At the ISE, CBOE, and PHLX, for instance, GOOGL's 50-day put/call volume ratio of 0.80 rests just 1 percentage point from a 52-week peak. While some of this is likely a result of shareholders hedging, skepticism toward Alphabet Inc has been on the rise elsewhere on Wall Street. Specifically, short interest jumped 8.4% in the two most recent reporting periods to 3.2 million shares. While this represents just 0.5% of GOOGL's available float, it's still the loftiest number of bearish bets levied toward the stock since mid-May.

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