Shares of oil major BP plc (ADR) (NYSE:BP) have been on a tear higher in recent weeks, jumping more than 16% from their mid-November lows around $32.50. However, the oil-and-gas stock may have its work cut out for it if it wants to extend its lead any higher. Ahead of next week's January options expiration, BP is staring down potentially stiff resistance in the $40 neighborhood.

Specifically, Schaeffer's put/call open interest ratio (SOIR) of 0.58 registers in the 24th annual percentile, indicating near-term option players are more call-heavy than usual. In fact, six of BP's top 10 open interest positions are front-month calls, set to expire next Friday, Jan. 20. And leading these positions is the January 2017 40-strike call, which is currently out of the money.

Going into expiration week, this large amount of overhead call open interest could pose a potential problem for BP shares. Given that peak open interest currently lies at the overhead 40 strike, this area could exert options-related resistance to squash BP's run higher. There are 37,082 contracts in residence at the January 40 call, which is equivalent to 3.7 million shares. Based on the 10-day moving average of BP's trading volume, which is 5.7 million shares, this heavy accumulation of out-of-the-money calls accounts for 65.5% of BP's average daily trading volume -- an amount significant enough that the unwinding of hedges related to this call open interest could certainly keep a lid on the shares as expiration draws closer.

So far today, BP has traded on both sides of breakeven, and currently sits 0.1% higher at $37.80. The stock has stair-stepped its way to a 22% year-over-year gain, and notched an annual high just last week, before retreating back to its 20-day moving average.

But potential options-related resistance is not the only problem BP plc (ADR) (NYSE:BP) faces in its journey higher. Its 160-week moving average is also near the round $40 mark, currently perched at $39.21. This trendline has worked against the shares in the past, previously capping BP's 2015 highs. As a result, the prospects for additional short-term upside from BP look extremely limited.

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The Dow has continued to dance around the psychologically important 20,000 mark this week, but it was the Nasdaq Composite (COMP) that stole the spotlight. Specifically, the tech-heavy benchmark carved out a series of new highs -- as did its under-the-radar counterpart, the Nasdaq-100 Index (NDX) -- helped by a surge in so-called "FANG" stocks. Facebook Inc (FB), for instance, is on track for a 4.5% weekly advance, boosted by a round of bullish brokerage notes. And while shares of Netflix, Inc. (NASDAQ:NFLX) failed to capitalize on rumors it's a potential target for a Facebook takeover, the stock swung into positive week-to-date territory today on some upbeat analyst attention. Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOGL) also saw their fair shares of positive price action, up 3% and 1% week-to-date, respectively.

Meanwhile, Wednesday's Trump-related crash in biotechs -- which had started the week strong -- briefly stalled the COMP's uptrend, with the iShares NASDAQ Biotechnology Index ETF (IBB) sinking after the president-elect said drug companies are "getting away with murder." The healthcare-heavy exchange-traded fund (ETF) is set to close out the week with a modest gain, however, the mid-week pullback has some of IBB's biggest holdings hovering near critical technical levels, including Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) and Biogen Inc (NASDAQ:BIIB).

Trump's press conference also fueled big moves for the Mexican peso, as well as the iShares MSCI Mexico Capped ETF (EWW) -- both of which have struggled since the U.S. presidential election -- after the president-elect reiterated his support for imposing large import tariffs. In fact, Trump's Twitter feed shined the spotlight on automakers Fiat Chrysler Automobiles NV (NYSE:FCAU) and Ford Motor Company (NYSE:F) early in the week, praising both companies for increasing domestic investment. FCAU couldn't maintain this Trump-inspired momentum, however, and came crashing back down to earth on Thursday, after the Environmental Protection Agency (EPA) pointed an accusatory finger at the automaker.

Elsewhere on Wall Street, fourth-quarter earnings season kicked off -- although aluminum giant Alcoa Corporation (NYSE:AA) broke a long-standing tradition of being the first firm to report, following its split last fall. As such, big banks took center stage -- and are key events to watch, according to Schaeffer's Senior Equity Analyst Joe Bell, CMT --  a trend that will accelerate in next week's trading. This week, JPMorgan Chase & Co. (NYSE:JPM) has emerged as the one to beat, and could have room to run, although bank stocks Bank of America Corp (NYSE:BAC) and Wells Fargo & Co (NYSE:WFC) are trading higher after an initial negative reaction to their respective companies' results.

Looking ahead, traders will be eager to see if the Trump rally will continue through next Friday's inauguration, when Donald Trump will be sworn in as the 45th president of the U.S. While investor optimism continues to hover around extreme levels -- although this indicator suggests we're not quite at the euphoria stage of the sentiment cycle -- the Dow's repeated failure of the round 20,000 mark could translate into near-term trouble for stocks. Nevertheless, most major U.S. benchmarks are trading higher this afternoon, with the COMP on track for a big weekly gain. The S&P 500 Index (SPX) and Dow, meanwhile, are on pace to log weekly losses.

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Array Biopharma Inc (NASDAQ:ARRY) has had an exciting week, with buyout buzz fueling an earlier rally, which put the shares above a key retracement level. Today more unconfirmed M&A rumors seem to be swirling as ARRY soars 9.7% to $11.09 amid heavy volume, and earlier tapped a new nine-year high of $11.15. Meanwhile, one options trader placed a sizable bet, expecting the drug stock's ascent to stall.

Jumping right in, ARRY's call options are crossing the tape at 16 times the typical intraday pace, with call volume running in the 99th percentile of its annual range. Accounting for the bulk of this action is the March 12 call, where a sweep of 5,500 contracts was sold to open this morning, according to Trade-Alert. The call writer's goal is for ARRY to remain below the $12 mark through the option's expiration, on Friday, March 17. And by selling the calls, this trader pocketed a premium of over $412,000 (5,500 contracts * 100 shares per contract * $0.75 apiece).

Taking a step back, call-heavy action is nothing new for ARRY, though absolute volumes tend to be light. Specifically, the stock has seen more than 1,000 calls bought to open over the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to just 47 puts. But call selling is even more popular, with nearly 5,100 ARRY calls sold to open over the same period.

Outside of the options pits, sentiment toward the biotech stock is rather upbeat. All nine analysts tracking the stock maintain the equivalent of a "strong buy" rating -- though today's climb has left the average 12-month price target of $10.13 sitting underfoot. And though short interest accounts for 10.7% of ARRY's total float, these bearish bets are also seated close to their lowest level since April 2014.

Given the stock's technical prowess, it seems unlikely bulls will lose faith anytime soon, unless the takeover talk gets shut down. Array Biopharma Inc (NASDAQ:ARRY) is sitting on a whopping 231% year-over-year lead, and is on track to close today above the $11 mark for the first time since late 2007.

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NRG Energy Inc (NYSE:NRG) has staging a solid rebound since bouncing off early November low at $9.84 -- up nearly 48% at $14.52, and on track to notch its first weekly close north of its 80-week moving average since late 2014. And while much of NRG's positive momentum is likely a result of a standout earnings report and a recent surge in crude oil prices, short sellers may have had a hand in the upside, as well. A recent batch of options traders may be hoping for a continued round of short-covering, too, betting on the stock to extend its lead into territory not seen since late July

In fact, short interest on NRG plunged nearly 27% in the month of December -- a time frame in which the stock jumped 8.1%. There are still 15.3 million NRG shares sold short, though, which would take almost three days to cover, at the stock's average pace of trading. In other words, should the stock continue to move higher, more shorts may be encouraged to cover -- which could translate into bigger gains for the security.

This would likely please a recent batch of option bulls. Over the past two weeks, NRG's March 13 and 14 calls have seen the biggest rise in open interest, with a collective 13,628 contracts added. According to Trade-Alert, a block of 5,000 March 13 calls was bought to open last Friday for $550,000 (number of contracts * $1.10 premium paid * 100 shares per contract), while an 8,000-contract block of March 14 calls was bought to open on Monday for $720,000, based on the $0.90 premium paid.

Drilling down on the front-month series -- which expires at next Friday's close -- peak call open interest is found at the stock's January 2017 12-strike call, with 9,295 contracts outstanding. Data from the major options exchanges confirms some buy-to-open activity here, indicating bullish expectations for NRG Energy Inc (NYSE:NRG) are shared among near-term traders, as well.

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Our traders are stalking a lot of different stocks throughout the week, but not every potential trade idea develops into a formal recommendation to our subscribers. Whether it's the break of a key technical level, an unexpected news announcement, or an unfavorable options pricing environment, this regular feature will shed some light onto the factors we view as "dealbreakers" to otherwise intriguing trade setups.

Today, Schaeffer's Senior Trading Analyst Bryan Sapp shares his analysis on one stock he was considering -- but ultimately passed on: mining and metal stock Cliffs Natural Resources Inc (NYSE:CLF).

I've been looking to trade CLF from the long side. Among the things I like:

• The stock's huge outperformance, with CLF up nearly 600% year-over-year.
• There's a nice flagging pattern near the equity's multi-year highs.
• Short interest recently hit an all-time high. While it's come back sharply, almost 23% of CLF's float is still sold short.
• CLF reported worse-than-expected earnings in November, but the stock completely shrugged it off and ripped higher -- a potential sign of excessive pessimism.
• The equity's options are currently as cheap as they've been in the past year.
• CLF sports a Schaeffer's Volatility Scorecard (SVS) of 99, suggesting the options market has underpriced the equity's ability to make big moves on the charts over the past 12 months.

Despite all of the extremely positive Expectational Analysis® drivers listed above, CLF just didn't quite pass the test for me as a long-premium trade. For one, CLF is currently trading right in the middle of a volatile range. In a matter of only three days, CLF rallied from $8.37 to nearly $10 per share. However, it's currently near the middle of that range.

As an option buyer, you almost always want to initiate new directional trades at or near inflection points. In this case, however, CLF is about 7% off the recent highs and lows. There's a good chance that the shares merely chop around in this area -- and that's a situation that you don't want to be in when you're long option premium. 

Additionally, you'd have to risk too much on a long trade, as you would most likely want to stay in the trade so long as CLF remained above its recent swing lows near $8.30. This is just too much to risk, when in a leveraged instrument for a short period of time -- considering I had been looking to trade weekly 1/27 options on CLF.

In addition to the recent choppy price action, CLF also appears -- at least for now -- to be making a higher low, after its recent push to $11 in December. This higher low, should that $10 area hold as resistance, could be a sign of a change in trend for the shares.  

Lastly, there are some significant potential options-related headwinds in place for CLF.  The 9, 9.50, and 10 strikes have huge open interest on the call side, looking out multiple weeks. This open interest could serve as short-term speed bumps for the shares, and could cap any significant moves higher going forward.

This Cliffs Natural Resources Inc (NYSE:CLF) trade was a great example of a setup not being as attractive as it may appear on the surface. Always pay attention to your required risk for staying in a position, and then look for a potential reward that’s a multiple of that risk. I, personally, like to use at least a 3x potential reward for every position.  In this instance, it just doesn't make sense to me, given all of the factors listed above.

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T-Mobile US Inc (NASDAQ:TMUS) has been steadily climbing higher since bottoming out in early February. The shares are up an impressive 71% over this time frame, and are currently trading at $56.88. And today, one hedge fund cashed in on a bullish options trade that reaped major rewards from the gains in TMUS.

According to data from Trade-Alert, one hedge fund initiated a long call spread on TMUS last May, by purchasing 90,000 January 2017 50-strike calls and selling to open 90,000 January 2017 55-strike calls for a net debit of $0.62. With January options expiration just one week away -- and TMUS now trading comfortably above the sold call strike -- the hedge fund exited its bullish spread play today for $4.71.

Less the initial net debit of $0.62, that's a profit of $4.09 -- and with 90,000 spreads accounting for 100 contracts each, the total takeaway on the trade was north of $36 million. That's a 660% gain on the play (and that's what we mean when we talk about leverage).

In opting for a long call spread, the trader lowered the initial net debit on the TMUS trade -- as well as the breakeven point -- by offsetting the entry fee with the premium received from the sold contracts. In this way, the trader also lowered their maximum risk. Long call spreads are ideal plays for traders who are bullish towards an equity, but are comfortable limiting their profit potential on an upside move in exchange for the decreased cost of entry and lowered capital commitment (relative to a "vanilla" call buying strategy).

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Major stock indexes appear set to bounce back today, as earnings season kicks off. Among specific equities in the spotlight are bank stock Bank of America Corp (NYSE:BAC), streaming media interest Pandora Media Inc (NYSE:P), and IT specialist Infosys Ltd ADR (NYSE:INFY). Here's a quick look at what's driving BAC, P, and INFY.

• BAC kicked off the fourth-quarter earnings season by beating earnings-per-share expectations on the Street. However, the shares are down 0.8% in pre-market trading, as investors react to lower-than-predicted revenue. Should these losses materialize today, Bank of America Corp could be marking a change of pace from its recent history of upside post-earnings moves. But bullish options traders will be hoping the 30-day moving average continues to keep any losses in check. And analysts so far seem satisfied to maintain their optimistic outlooks, with 14 out of 19 calling BAC a "buy" or better, and not one rating the bank stock a "sell" -- not terribly surprising, considering the shares closed Thursday at $22.92, up 53.8% year-over-year.
  
  
• P is set to pop 8.8% higher at the open, after closing last night at $12.00, on news the company will cut about 7% of its U.S. workforce. Pandora Media Inc also said that it expects to top previously predicted quarterly revenue figures. The news earned P price-target hikes to $14 from $12 at FBR, and to $15 from $13 at FBN Securities. The stock could certainly benefit from more upbeat attention from the brokerage bunch, as half of the firms tracking P maintain a "hold" rating or worse. Today's gains could have short sellers on edge, considering nearly 30% of P's total float is dedicated to short interest. Based on typical daily volumes, it would take shorts more than three weeks to cover all their pessimistic positions.

• INFY reported net profits up 6.1% for its December quarter, but the company also cut its full-year outlook, causing the shares to slide 2% ahead of the bell. Such losses could have Infosys Ltd ADR testing its recent foothold above the 50-day moving average, after finishing Thursday at $15.25 -- its highest close since Nov. 1. Options traders may not mind if that trendline fails to keep the stock in check, however. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), INFY has seen 2.53 puts purchased for every call over the past 10 weeks -- a put/call volume ratio in the bearishly skewed 87th percentile of its annual range. 

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Analysts are weighing in on streaming service Netflix, Inc. (NASDAQ:NFLX), social media stock Facebook Inc (NASDAQ:FB), and oil-and-gas company Anadarko Petroleum Corporation (NYSE:APC). Here's a quick roundup of today's bullish brokerage notes on NFLX, FB, and APC.

• NFLX is 2% higher at $131.79, following an upgrade to "hold" from "sell" at Deutsche Bank, which also hiked its price target to $110 from $92 -- still 16.5% below the stock's current perch. NFLX, which is due to report fourth-quarter earnings next Wednesday night, is up 19% from its November lows -- helped by a recent bounce off its 20-day moving average -- and the stock has managed to tack on almost 24% year-over-year. In the option pits, near-term option players have been exceptionally put-skewed, with Netflix, Inc.'s Schaeffer's put/call open interest ratio (SOIR) of 1.12 sitting higher than 99% of all other readings taken in the last 12 months.
  
  
• FB is up 1.6% to trade at $128.61, after an upgrade to "strong buy" from "outperform" at Raymond James, which cited Facebook Inc's "continued momentum" in the fourth quarter as one reason for its increased optimism. FB recently broke out above the $124-$125 area that had contained the shares since an early November bear gap, and took back its 100-day moving average in the process. Meanwhile, the firm recently made waves on rumors that it's considering a bid for NFLX. Near-term option players have been more put-biased than usual in FB's option pits, with its SOIR of 0.72 sitting just 13 percentage points from an annual peak.
  
  
• APC is trading fractionally lower at $71.40, after the company announced it will be selling its Eagleford Shale assets for about $2.3 billion. Following the news, RBC raised its price target to $82 from $81, while Simmons lifted its target price to $77 from $66. On the charts, APC has been on a steady journey higher since touching an eight-year low in January 2016, adding over 150%. Bullish betting has ramped up in Anadarko Petroleum Corporation's option pits over the last two weeks, with 2.54 calls bought to open for every put at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This top-heavy call/put volume ratio ranks in the upper quartile of its annual range.

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Analysts are weighing in on software provider Nice Ltd (ADR) (NASDAQ:NICE), real estate marketplace Zillow Group, Inc. (NASDAQ:ZG), and healthcare stock athenahealth, Inc (NASDAQ:ATHN). Here's a quick roundup of today's bearish brokerage notes on NICE, ZG, and ATHN.

• NICE is down 0.6% at $69.13, following a downgrade to "in-line" from "outperform" by Imperial Capital, although the brokerage firm also boosted its price target to $76 from $74. J.P. Morgan Securities also raised its price target on the software stock to $75 from $74. NICE has taken several strong bounces off its 50-week moving average in the past year, translating into a 52-week gain of 21.5%. In the options pits, near-term option players are more put-skewed than usual toward the stock, with Nice Ltd's Schaeffer's put/call open interest ratio (SOIR) of 1.17 sitting just 5 percentage points below an annual peak.
  
  
• ZG is trading higher, up 1.2% at $37.79, in spite of a downgrade to "equal-weight" from "overweight" at Morgan Stanley. The brokerage firm said that while it remains "bullish in the long-term opportunity, the share price is approaching our target price ... which causes us to move to the sidelines." ZG is up almost 67% year-over-year, and has recently established a foothold in the $37-$38 region -- site of its previous highs -- after an early December bull gap. Short sellers may be sweating, too. With 5.7% of ZG's float sold short, it would take more than 17 days of trading to cover these bearish bets, at Zillow Group, Inc.'s average volume.
  
  
• ATHN is trading 2.2% lower at $120.37, after a price-target cut to $95 from $110 at Jefferies, which also reiterated its "underperform" rating on the shares. ATHN is down more than 20% year-over-year, and is staring up at its 50-week moving average. A recent rally brought the shares right up to this stern layer of resistance, but today's decline has the stock back below it -- having failed to close north of here on a weekly basis since last March. In the option pits, short-term traders have rarely been as put-skewed toward athenahealth, Inc as they are now. In fact, the stock's SOIR of 1.68 ranks in the 97th annual percentile.

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Despite earnings season getting underway, U.S. stocks have generally remained in a holding pattern this morning. Among specific equities in focus today are video game retailer GameStop Corp. (NYSE:GME), food ordering platform GrubHub Inc (NYSE:GRUB), and tech stock Mobileye NV (NYSE:MBLY). Here's a quick look at what's moving GME, GRUB, and MBLY.

• GME has fallen 8.5% to trade at $22.61, after the retailer reported disappointing holiday sales and lowered its same-store sales guidance. The stock is now on track for its lowest close in roughly two months, after its December rally failed to clear the descending 100-day moving average. Today's collapse should be a welcome sight for option bears. During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GameStop Corp. traders have bought to open 6.01 puts for every call -- a ratio outranking 99% of comparable readings from the past year.

• GRUB is up 3.3% at $38.61, boosted by an upgrade to "overweight" from "equal weight" at Morgan Stanley -- which also raised its price target to $44 from $36 -- citing the potential for higher profits on a growing restaurant selection and new users. The stock is trending toward a fourth straight daily victory, too, and if the shares can clear their 100-day trendline, they could be off to the races. A short-squeeze situation could add more fuel to GrubHub Inc's fire. Over 16% of the stock's float is sold short, which would take two weeks to cover, at GRUB's average daily trading volume.

• MBLY has advanced 2.4% to hover near $41.81, after Jefferies started coverage with a "buy" rating and a $52 price target -- territory not explored since October 2015. The stock has bounded sharply higher since putting in a late-December bottom south of $34. Mobileye NV shares could further benefit as short sellers unwind their underwater positions. The stock's short-interest ratio is 7.4, meaning it would take well over a week for shorts to cover, based on MBLY's usual trading pace.

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JPMorgan Chase & Co. (NYSE:JPM) was among the major banks that reported earnings this morning, unofficially kicking off the fourth-quarter earnings season. And like several of its peers, JPM stock is on the rise, after the financial firm surpassed both top- and bottom-line expectations. Specifically, the shares have tacked on 1.2% at $87.30, after earlier notching a new all-time high of $88.17. But with optimism toward the stock still far from peak levels, there could be more room yet for JPM to run.

Thus far, no analysts have weighed in on JPM's earnings beat, but the equity could certainly stand to benefit from some upbeat attention. Despite the stock's huge post-election rally, and a series of higher highs, more than half of the brokerage firms tracking JPM still recommend holding or selling the shares. Plus, the average 12-month price target of $87.59 sits at a discount to today's peak.

Elsewhere, short interest on JPM fell in the most recent two-week reporting period, and represents a mild 1.1% of the stock's total float. But that reading may not be as bullish as it seems, given that short interest is coming off its highest level since January 2014, and is still in the 96th percentile of its annual range. Simply put, there's more room for bearish bets to unwind, potentially giving JPM a boost.

Looking to the options pits, there are signs optimism has been picking up. For instance, JPM's 10-day call/put volume ratio of 1.70 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks higher than 90% of the past year's readings.

However, the security's Schaeffer's put/call open interest ratio (SOIR) of 2.20 tells a different story, as put open interest more than doubles call open interest among options in the front three-months' series. Moreover, this ratio sits just 3 percentage points from an annual put-skewed high. While it's possible some of this put action has come at the hands of shareholders looking to protect their paper profits, heavy accumulations of underfoot put open interest could serve as support.

Technically speaking, JPM has given shareholders little to complain about of late. Up 50% year-over-year, the stock has outperformed the broader S&P 500 Index (SPX) by 20 percentage points over the past three months. Plus, the shares have found a foothold at the 20-day moving average, which kept JPMorgan Chase & Co. (NYSE:JPM) afloat even after its post-election rally stalled late last month.

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U.S. stocks appear set to take a breather, as traders' attention turns toward the Fed. Among specific equities in the spotlight are tech titan Apple Inc. (NASDAQ:AAPL), travel concern Delta Air Lines, Inc. (NYSE:DAL), and biotech stock TESARO Inc (NASDAQ:TSRO). Here's a quick look at what's driving AAPL, DAL, and TSRO.

• AAPL is reportedly looking to offset weakening iPhone sales by making a big play in media, building its streaming business with original content, such as television shows and movies. Not everyone is impressed with Apple Inc., though, as RBC this morning lowered its estimates for fourth-quarter and full-year revenue, citing "currency headwinds." The brokerage also adjusted its current-quarter outlook to "reflect incremental production cuts." AAPL is down 0.6% in electronic trading, pulling back after tapping a fresh annual high just south of $120 on Wednesday and closing at $119.75. Analysts are largely optimistic, but with a 14-day Relative Strength Index (RSI) of 73 -- in overbought territory -- the stock may be due for a breather.
  
  
• After initially rising in pre-market trading following the company's earnings report, shares of DAL have reversed course, and are now set to slide 0.9% at the open. The airline revealed weak fourth-quarter profit, but projected better-than-expected unit revenue in the current quarter. On the bright side, Delta Air Lines, Inc. CEO Ed Bastion said this morning that an uptick in consumer confidence since Election Day has already helped the company's earnings numbers. DAL closed last night at $51.44, not far off its December annual highs, and comfortably above the supportive 40-day moving average. But the equity could be in trouble, should analysts meet this morning's report with bearish attention. At present, eight out of 11 firms call the stock at least a "buy," with not a single analyst holding a "sell" opinion.

• TSRO is on pace to drop 3.4% at the open, following news the company received a Complete Response Letter from the U.S. Food and Drug Administration (FDA) regarding its chemotherapy-related nausea treatment. TESARO Inc has been barreling higher on the charts since its late-June drug-induced bull gap, and at $145.90, is sitting on a jaw-dropping 274% year-over-year lead. But that hasn't stopped options players betting against the stock -- amid relatively light volumes, anyway. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), TSRO's 10-day put/call volume ratio of 1.25 ranks higher than three-quarters of all readings from the past 12 months. 

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