Today's Options Market Update
Stocks Jump on Fed Chief Remarks on Monetary Policy
Stocks rallied sharply and Treasury yields fell as Federal Reserve Chairman Jerome Powell took the podium and appeared to be more dovish than expected and suggested a September rate cut could be likely. Other Fed speakers this week expressed hesitance about rate cuts, with Chicago Fed President Austan Goolsbee calling last month's Producer Price Index (PPI) "a dangerous data point" and saying the September Fed meeting is "live"—meaning a decision isn't pre-ordained.
"Barring a hot print by the Personal Consumption Expenditures (PCE) inflation reading next week and/or a stronger-than-expected set of readings on labor market conditions, we are still penciling in a September rate cut of 25 basis points," said Kevin Gordon, senior investment strategist at Schwab.
The S&P 500 index finished lower Thursday to post its first five-session losing streak since January following more signs of inflation in the Philadelphia Fed Index and the S&P Global PMI. It's been feast or famine for the S&P 500, which just a couple of weeks ago closed at record highs five days in a row. It's not unusual to see consolidation ahead of a key Powell speech, especially after record highs and at this seasonally soft time of year. Most of the recent weakness reflects rotation out of the heavily capitalized tech and communication services, giving the market a more defensive tone as investors embrace previously unloved areas like health care, staples and real estate.
Source: Schwab Center for Financial Research
Morning Rush
The 10-year U.S. Treasury yield (TNX) is falling 7 basis points to 4.26%.
The U.S. Dollar Index ($DXY) is lower by 0.89 to 97.73.
WTI Crude Oil (/CL) is higher by 0.22% to $63.66/barrel.
Gold prices have traded in a range of $3,362.80-$3,423.40 last seen trading higher by 1.00% to $3,415.50oz.
Natural Gas prices have traded in a range of $2.80-2.91 and were last seen trading lower by 3.84% to $2.80.
Bitcoin (BTC) is higher by ~3.44% today to $116,153.00.
Today's Bullish Activity
Moving higher this morning is Ross Stores Inc. (ROST + $5.32 to $150.94) after the discount retailer reported fiscal-year Q2 earnings of $1.56 per share, above the $1.53 FactSet estimate. Revenues grew 5.0% year-over-year to $5.53 billion, compared to analysts' expectations of $5.54 billion. The company issued Q3 guidance that came in below the Street's expectations but its Q4 outlook topped estimates. Puts are outnumbering calls ~2:1 with the August 22nd 140.00 put seeing the most action from traders (volume is 1,744).
Also moving higher this morning is Ulta Beauty Inc. (ULTA + $6.82 to $527.00) after Barclays upgraded the cosmetics retailer to "Overweight" from "Equal Weight" while also increasing its price target to $589 from $518. Puts are modestly outnumbering calls, but the August 22nd 532.50 call is seeing the most action from traders (volume is 268).
New 52-week highs (276 new highs today): Analog Devices (ADI + $6.04 to $252.99), Altria Group (MO + $0.17 to $67.85), Northrop Grumman Corp. (NOC - $2.30 to $594.91)
Notable Call Activity
Some unusual call activity (~10:1 calls over puts) is being seen in metal recycling company Commercial Metals Company (CMC + $2.98 to $59.29) as option traders primarily target the September 19th 62.50 call. Volume on this contract is 1,508 versus open interest of 278, so we know that we have some fresh positioning. The activity primarily consisted of a 1,400-contract block that was bought for $0.70, suggesting bullish intent.
Today's Bearish Activity
Moving lower this morning is Workday Inc. (WDAY - $11.48 to $216.10) after the HR and finance software company reported fiscal-year Q2 earnings of $2.21 per share (excluding non-recuring items), compared to the FactSet consensus estimate of $2.11. Revenue grew 12.6% year-over-year to $2.35 billion, slightly exceeding analysts' expectations of $2.34 billion. However, the company's Q3 outlook for subscription revenue came just below the Street's forecasts. Puts are outnumbering calls ~2:1 with the August 22nd 200.00 put seeing the most action from traders (volume is 5,048).
Also trading to the downside this morning is Intuit Inc. (INTU - $45.74 to $652.02) after the business software company reported fiscal-year Q4 earnings-per-share of $2.75 (excluding non-recurring items), compared to the FactSet consensus estimate of $2.66 per share. Revenue rose 20.0% year-over-year to $3.83 billion, above analysts' estimates of $3.74 billion. INTU also announced a new $3.2 billion share repurchase program and a 15.4% of its quarterly dividend. However, the company's revenue guidance came just shy of analysts' estimates. Puts are slightly outnumbering calls but the August 22nd 670.00 call is seeing the most action from traders (volume is 1,525).
New 52-week lows (27 new lows today): Bayfirst Financial Corp. (BAFN + $1.59 to $8.22), Jaguar Health Inc. (JAGX- $0.02 to $1.80), Saverone 2014 Ltd ADR (SVRE - $0.04 to $1.90)
Notable Put Activity
Some unusual put activity (~2:1 puts over calls) is being seen in financial services holding company U.S. Bancorp (USB + $1.97 to $48.14) as option traders primarily target the September 19th 47.00 put. Volume on this contract is 2,000 versus open interest of 16, so we know that we have fresh positioning. The activity consisted of multiple-sized blocks that were bought around the same time at the ask prices between $0.68-$0.70, suggesting bearish intent.
Volume Signals
Petroleo Brasileiro SA (PBR/A + $0.27 to $11.34): Option volume is running at over 1,000x the daily average on this Brazilian state-owned petroleum company which is primarily being driven by activity on the December 19th 12.50 call. Volume on this contract is 65,630 versus open interest of 1,946, so we know nearly all of this represents heavy fresh positioning. The volume was driven by several large contract blocks that were bought at various times for $0.20, suggesting bullish intent.
Wolverine World Wide Inc. (WWW + $1.45 to $30.32): Option volume is running at ~32x the daily average on this footwear maker which is primarily being driven two 1,200 contract blocks on the September 19th 30.00 call that were traded around the same time for $1.62 when the bid/ask spread was $1.35 x $1.75. Volume on this contract is 3,018 versus open interest of 1,076, so we can assume we have fresh positioning, with bullish intent since the trades took place above the midpoint of the bid/ask spread.
Kimco Realty Corporation (KIM + $0.69 to $22.24): Option volume is running at ~30x the daily average on this real estate company, driven by activity on the January 16th 2026 22.50 call. Volume on this contract is 1,165 versus open interest of 620, so we can assume we have some fresh positioning. The volume consisted of several various-sized contract blocks that were bought around the same time for $0.85, suggesting bullish intent.
Gauging Volatility
The Cboe Volatility Index (VIX – 2.00 to 14.60) has been on both sides of the unchanged mark today (intraday range is 14.41-16.83), as equity markets are rallying around the midday mark (DJI +903, SPX + 97, COMP + 359). VIX option volume (695,271) is above average today as the index is currently #10 on the "Top Volume by Underlying" list. The volume put/call ratio is currently 0.32, and the highest volume contract is the November 19th 55.00 call (volume is 75,076 vs. open interest of 123,966).
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