Today's Options Market Update

Investors are hunkered down waiting for tomorrow's Federal Reserve decision, with stocks flat to slightly lower early. Odds of a rate cut neared 90%, according to the CME FedWatch Tool. While the main course gets served tomorrow, job openings data soon after today's open offer an appetizer. Meanwhile, investors will likely eye cryptocurrencies, volatility, and yields, a three-headed monster that ganged up on Wall Street yesterday.

One possibility is a "hawkish cut," in which Fed policy makers slice rates but warn investors not to expect any near-term repeats. Odds of a January cut following one this week fell below 24% today in futures trading. Even tomorrow, not all policy makers seem likely to fall in line when the decision arrives at 2 p.m. ET. "We expect the Fed to cut by 25 basis points, but it won't be unanimous," said Cooper Howard, director of fixed income research and strategy, Schwab Center for Financial Research (SCFR). "The argument to cut is based on evidence that the labor market is softening and could soften more. That could drag the economy down. The argument not to cut is based on the fact that inflation remains too high and isn't showing signs of cooling."

Monday ended four-day win streaks for the Nasdaq and S&P 500 index, though technology stocks got a boost from the chip market and news that the Trump administration will allow Nvidia (NVDA) to sell its H200 chip to China. Beyond that, investors appeared to be in risk-off mode following last week's run to near-record highs. Earnings tomorrow afternoon from Oracle (ORCL) and late Thursday from Broadcom (AVGO) put the spotlight squarely on chip and data center demand amid concerns about overspending, circular dealing, and the move from cash financing to heavy debt issuance.

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is slightly higher to 4.178%.

The U.S. Dollar Index ($DXY) is higher by 0.149 to 99.236.

WTI Crude Oil (/CL) is lower by 1.09% to $58.24/barrel.

Gold prices have traded in a range of $4,197.80-$4,242.30 and were last seen trading higher by ~0.41% to $4,235.10/oz.

Natural Gas prices have traded in a range of $4.686-4.878 today and were last seen trading lower by 3.16% to $4.757.

Bitcoin (BTC) is higher by ~1.24% to $91,768.20 today.

Gapping up to year-to-date highs this morning is G-III Apparel Group Ltd. (GIII + $3.33 to $33.00) after the retailer reported Q3 adjusted EPS of $1.90 per share ($0.29 beat) on revenue that decreased 9% year-over-year (YoY) to $988.6M (below the $1.012B expected). Concurrent with the earnings release, GIII announced the company’s first-ever quarterly dividend of $0.10 per share. Looking ahead, the company raised its FY26 adjusted EPS guidance to ~$2.90 (from $2.80) and its FY26 adjusted EBITDA to a range of $208-213M (from $198-208M) but lowered its FY26 sales guidance to about $2.98B (from $3.02B). Calls are outnumbering puts ~4:1 with the December 19^th 35.00 call seeing the most action from traders (volume is 327).

Also trading to the upside this morning is Viking Holdings Ltd. (VIK + $1.00 to $67.68) after Goldman Sachs upgraded the cruise operator to “Buy” from “Neutral” and raised their price target to $78.00 from $66.00. Analysts at Goldman cited the company’s differentiated geographic exposure and higher-income demographic, which suggests strong pricing power as reasons behind the move. Option volume is light at the time of this writing with the December 19^th 70.00 call being the highest volume contract (volume is 22).

New 52-week highs (86 new highs today): Ciena Corp. (CIEN + $2.56 to $215.49), Lumentum Holdings Inc. (LITE + $12.04 to $354.60), Morgan Stanley (MS + $2.68 to $179.51)

Some unusual call activity (~30:1 calls over puts) is being seen in lidar sensor maker The Chemours Company (CC + $0.53 to $12.74) as option traders primarily target the December 12^th 12.50 call. Volume on this contract is 3,585 versus open interest of 128, so it’s likely that nearly all the volume represents new positioning. The majority of the transactions consisted of various-sized blocks that were bought around the same time at the ask price of $0.60 each, which suggests bullish intent.

Leading the point decliners list this morning is AutoZone Inc. (AZO - $166.46 to $3,600.50) after the auto parts retailer reported fiscal Q1 adjusted EPS of $31.04 ($0.99 miss) on revenue that increased 8.20% YoY to $4.629B (slightly below the $4.637B expected) as Q1 same-store sales increased 4.7% YoY. AutoZone opened 53 new stores globally during the quarter and CEO Phil Daniele said that the company plans to aggressively open stores over the remainder of the fiscal year to gain market share. Calls and puts are trading roughly even with the December 19^th 3200.00 put being the highest volume contract (volume is 59).

Also trading to the downside this morning is Vertiv Holdings Co. (VRT - $7.25 to $178.36) after Wolfe Research downgraded the data center infrastructure provider to “Peer Perform” from “Outperform” without a price target on the stock. Analysts at Wolfe Research cited the stock’s lofty valuation, which stood at roughly 70 as of yesterday’s close. Calls are outnumbering puts better than 3:1 with the December 12^th 185.00 call garnering the most attention from traders (volume is 16,703).

New 52-week lows (38 new lows today): Diageo PLC (DEO - $2.33 to $85.61), Grand Canyon Education Inc. (LOPE + $2.42 to $153.23), Transcat Inc. (TRNS - $1.18 to $50.96)

Some unusual put activity (~80:1 puts over calls) is being seen in CEMEX, S.A.B. de C.V. (CX - $0.04 to $10.94) which is primarily driven by a 7,500 contract block that was bought on the April 2026 11.00 put for $0.87 when the bid/ask spread was $0.75 x $0.90 (open interest is 3). We know that this block is a new position based on the open interest figure, and we can assume that the intent is bearish in nature since the trade took place above the midpoint of the bid/ask spread.

Camping World Holdings Inc. (CWH + $0.04 to $10.54): Option volume is running at ~38x the daily average on this RV-maker which is primarily driven by two large block trades on the January 16^th 2026 10.00 call – a 4,000 contract block was bought for $1.05 and (around the same time) a 1000 contract block was bought for $1.00 when the bid/ask spread was $0.45 x $1.20 (open interest is 103). We know that these blocks are new positions based on the open interest figure, and we can assume that the intent is bullish in nature since both trades took place above the midpoint of the bid/ask spread.

Ecopetrol S.A. (EC + $0.37 to $6.19): Option volume is running at ~34x the daily average on this integrated energy company as option traders primarily target the January 16^th 2026 12.00 call. Volume on this contract is 5,006 versus open interest of 0, so we know that all the volume represents fresh positioning (assuming no day trades). The majority of the transactions consisted of various-sized blocks that were bought around the same time at the ask price of $0.10 each, which suggests bullish intent.

LKQ Corp. (LKQ + $0.05 to $28.92): Option volume is running at ~13x the daily average on this auto parts maker which is primarily being driven by some spread activity on the December 2026 expiration earlier this morning:

• 30.00 call (open interest is 666): A 2,000 contract block (transacting as 1,400, 200,200,200 block trades at the same time) was bought for $3.55 when the bid/ask spread was $3.10 x $3.90.
• 40.00 call (open interest is 2): A 2,000 contract block (transacting as 1,400, 200,200,200 block trades at the same time) was simultaneously sold for $1.00 when the bid/ask spread was $0.60 x $1.45.

We know that these blocks are new positions based on the respective open interest figures and it appears that a $10.00-wide bull call spread was established for a net debit of $2.55 (x 2K contract x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that LKQ will close above the break-even price of $32.55 at expiration.

The Cboe Volatility Index (VIX - 0.10 to 16.56) has been on both sides of the unchanged line today (the intraday range is 16.45-17.20), as equity markets are higher around the midday mark (DJI + 109, SPX + 15, $COMP + 45). VIX option volume is average today at 362,672 contracts, and the activity has been modestly call-biased so far today.