Unusual Options Activity Tue 6/11/24

The following options are exhibiting notable trading, potentially indicating changing sentiment toward the underlying stocks, and/or potentially representing positioning for increased volatility.

Bullish Call Activity:

• RIOT Weekly Jun14 10 calls (volume: 7.4K, open int: 10.2K, implied vol: ~79%, prev day implied vol: 73%). Co is expected to report earnings mid-August.
• SIRI Jun 2.5 calls (volume: 15.4K, open int: 590, implied vol: ~50%, prev day implied vol: 45%). 1330 contracts traded in a single transaction. Co is expected to report earnings mid-July.
• INTC Weekly Jun28 31.5 calls (volume: 2310, open int: 510, implied vol: ~33%, prev day implied vol: 31%). Co is expected to report earnings late July.
• WFC July 65 calls (volume: 20.6K, open int: 24.7K, implied vol: ~27%, prev day implied vol: 25%). 17.2K traded in a single transaction. Co at conference said older office buildings in large cities are seeing some stress related to commercial real estate. Co is confirmed to report earnings July 12 before the open.
  

Bearish Put Activity:

• X Weekly Jun14 36 puts (volume: 1200, open int: 0, implied vol: ~36%, prev day implied vol: 32%). Co is expected to report earnings late July. In late May, US Steel and Nippon Steel announced receipt of all non-U.S. regulatory approvals for merger.
• ORCL Jun 122 puts are seeing interest ahead of earnings tonight (volume: 1600, open int: 710, implied vol: ~36%, prev day implied vol: 33%).
  

Sentiment: The CBOE Put/Call ratio is currently: 0.90, VIX: (13.15, +0.41, +3.2%).
June 21 is options expiration -- the last day to trade June equity options.

=Wells Fargo (WFC) reported earnings on Tue 14 Jan 20 (b/o)

Wells Fargo misses by $0.17, misses on revs

Reports Q4 (Dec) adjusted earnings of $0.93 per share, $0.17 worse than the S&P Capital IQ Consensus of $1.10; revenues fell 5.4% year/year to $19.86 bln vs the $20.11 bln S&P Capital IQ Consensus.

Q4 net interest margin of 2.53%, down 13 basis points. Q4 efficiency ratio 78.6%. Average loans were $956.5 billion in the fourth quarter, up $6.8 billion from the third quarter. Period-end loan balances were $962.3 billion at December 31, 2019, up $7.4 billion from September 30, 2019.

Mortgage orginations of $60 bln, up 58% yr/yr.

"Wells Fargo reported $2.9 billion of net income in the fourth quarter and diluted earnings per share of $0.60, which included the impact of $1.5 billion, or $(0.33) per share, of litigation accruals for a variety of matters, including previously disclosed retail sales practices matters. Our net interest income declined in the fourth quarter driven predominantly by the impact of the lower interest rate environment. In addition, while we are spending what is necessary in order to improve risk management, our other expenses were too high and becoming more efficient remains a top priority."

Earnings this week : Jan 13 - 17, 20 (wk 3)

Monday (Jan 13)

• Morning: SJR

Tuesday (Jan 14)

• Morning: APHA C DAL FRC INFO JPM WFC WIT
• Afternoon: OGI WAFD

Wednesday (Jan 15)

• Morning: BAC BLK GS PNC USB UNH
• Afternoon: AA EGBN HWC KMI

Thursday (Jan 16)

• Morning: BK HOMB IIIN MS PPG TSM WNS
• Afternoon: OZK BEDU CSX PBCT PRGS

Friday (Jan 17)

• Morning: CFG FAST FHN JBHT KSU RF SLB STT

Notable earnings reports:

• JPMorgan (JPM), Wells Fargo (NYSE:WFC), Delta Air Lines (NYSE:DAL), Citigroup (NYSE:C), IHS Markit (NYSE:INFO) and Aphria (APHA) on January 14; 
• Bank of America (NYSE:BAC), Goldman Sachs (GS) United Healthcare (UNH), BlackRock (NYSE:BLK), U.S. Bancorp (NYSE:USB), Alcoa (NYSE:AA) and PNC Financial (NYSE:PNC) on January 15; 
• Morgan Stanley (NYSE:MS), Taiwan Semiconductor (NYSE:TSM) and CSX (NASDAQ:CSX) on January 16; Fastenal (NASDAQ:FAST), J.B. Hunt Transport (NASDAQ:JBHT), Kansas City Southern (NYSE:KSU), Schlumberger (NYSE:SLB) and State Street (NYSE:STT).

Earnings season: Money Center Q2 Recap

The table below provides a recap of the Q2 earnings season for the six major money center banks. The Book Value per Share, Tangible Book Value per Share, and three month change has been updated to reflect today's prices.

2Q19 Results	MS	JPM	BAC	WFC	C	GS
RoE	12.1%	16.0%	11.6%	13.2%	10.1%	11.1%
RoTCE	13.8%	20.0%	16.2%	15.7%	11.9%	11.7%
Rev Growth (Y/Y)	-3.4%	4.0%	2.0%	0.0%	2.0%	-2.0%
Net Income Growth	-1.0%	16.0%	8.0%	-3.0%	7.0%	-6.0%
TBVPS/Price	1.09x	1.95x	1.53x	1.45x	0.96x	0.99x
BVPS/Price	0.93x	1.57x	1.15x	1.10x	1.12x	1.04x
Trading Revs (Bln)	$3.30	$6.39	$3.20	N/A	$4.67	$3.48
Equity Trading (Bln)	$2.13	$1.73	$1.10	N/A	$0.79	$2.01
Equity (Y/Y)	-14%	-12%	-13%	N/A	-9%	6%
FICC Trading (Bln)	$1.39	$3.69	$2.10	N/A	$3.32	$1.47
FICC (Y/Y)	-18%	-3%	-8%	N/A	8%	-13%
3-month Return	-3%	1%	0%	9%	-3%	-4%
Forward P/E	8.4X	10.8x	9.5x	9.5x	8.5x	9.1x
NIM	N/A	2.49%	2.44%	2.82%	2.67%	N/A
Loan Growth Y/Y	N/A	2%	4%	1%	3%	10%

Wells Fargo (WFC) reported earnings on Fri 13 Oct 2017 (b/o)

• Wells Fargo missed both top and bottom line estimates

** charts after earnings **

  

Wells Fargo misses by $0.19 (including $0.20 in litigation), misses on revs; mortgage originations rose to $59 bln vs $56 bln in Q2; efficiency ratio above target range

• Reports Q3 (Sep) earnings of $0.84 per share, $0.19 worse than the Capital IQ Consensus of $1.03; revenues fell 1.8% year/year to $21.93 bln vs the $22.3 bln Capital IQ Consensus. GAAP EPS includes $0.20 of discrete litigation accrual.
• Total average loans of $952.3 billion, down $5.1 billion, or 1 percent. Total average loans of $952.3 billion, down $5.1 billion, or 1 percent.
• Net interest margin was 2.87 percent, down 3 basis points from second quarter 2017.
• Net interest income in third quarter 2017 was $12.5 billion, in line with second quarter 2017, as the impacts of lower investment portfolio yields driven by accelerated prepayments and lower average loan balances were offset by the impact of one additional day and a modest benefit from all other growth and repricing.
• Residential mortgage loan originations were $59 billion in the third quarter, up from $56 billion in the second quarter. The production margin on residential held-for-sale mortgage loan originations was 1.24 percent, consistent with the second quarter.
• Mortgage servicing income was $309 million in the third quarter, down from $400 million in the second quarter, primarily due to higher unreimbursed servicing costs.
• The efficiency ratio was 65.5 percent in third quarter 2017 (co's target range of 55-59%), which included a 456 basis point impact from the $1 billion litigation accrual.

WFC — is it a buy?

• June 9:  Is WFC a buy?

• Yes, +4% in the following days

Wells Fargo (WFC) reported 4Q earnings on Fri 15 Jan 2016 (before open)

** charts before earnings **

** charts after earnings **

Wells Fargo reports EPS in-line, revs in-line :

• Reports Q4 (Dec) earnings of $1.03 per share, in-line with the Capital IQ Consensus of $1.03; revenues rose 0.7% year/year to $21.59 bln vs the $21.75 bln Capital IQ Consensus. 
• Total loans were $916.6 bln at Dec 31, 2015, up $13.3 bln from Sept 30, 2015. Q4 loan growth was broad-based across all portfolios (other than real estate 1-4 family junior lien mortgages) and did not include any loan portfolio acquisitions. Core loan growth was $15.4 bln, or 2%, as non-strategic/liquidating portfolios declined $2.1 bln in the quarter. Total average loans of $912.3 bln, up $62.9 bln, or 7%
• During Q4, residential mortgage loan originations were $47 bln, down $8 bln linked quarter on seasonality. The production margin on residential held-for-sale mortgage loan originations5 was 1.83%, compared with 1.88% in third quarter. Net mortgage servicing rights (MSRs) results were $417 mln, compared with $253 mln in third quarter 2015.
• Net interest income in Q4 increased $131 mln from Q3 to $11.6 bln, largely driven by growth in earning assets. Net interest margin was 2.92%, down 4 bps QoQ.
• Credit quality: "The quarterly loss rate (annualized) remained low at 0.36% and nonperforming assets declined by $497 mln, or 15% (annualized), from the prior quarter. The allowance for credit losses in the fourth quarter was stable (no reserve build or release) as continued credit quality improvements in the residential real estate portfolio were offset by higher commercial reserves reflecting continued deterioration within the energy sector. Future allowance levels may increase or decrease based on a variety of factors, including loan growth, portfolio performance and general economic conditions." Book value +0.4% QoQ to $33.81/share.

JPM and WFC report earnings tomorrow Friday 10/10/13 (before market opens)

MS reports next Friday 10/18/13

*** update Friday 10/11/13 after JPM and WFC reported earnings ***