Today's Options Market Update
Stocks Rally to Fresh Highs Post-FOMC
Tech shares took charge this morning after markets initially wobbled on the Federal Reserve's first rate cut since December. The quarter point cut and projections of two more this year came as expected, but there was also focus on the Fed's relatively conservative long-term outlook that projects fewer rate cuts next year than investors anticipate.
"As expected, the Fed cut its short-term interest rate, citing concerns about slowing job growth," said Kathy Jones, chief fixed income strategist at Schwab. "Where Fed policy goes from here is less clear. With a wide dispersion of projections about the path of interest rates among the members, it's hard to have confidence that the path of interest rates will follow the median projections."
The median projection for 2026 only implies one additional cut next year to a range of 3.25% to 3.5%, well above the sub-3% rate that the fed funds futures market currently implies. The rate change surprised few and left Wall Street unimpressed, judging by the lackluster initial response to what many viewed as conservative comments by Fed Chairman Jerome Powell. Powell said there was little support for a 50-basis point cut and called the Fed's move, "risk management." Major indexes swung back and forth Wednesday before closing nearly unchanged for the S&P 500 index, though the small cap Russell 2000® Index (RUT) held onto gains. Consumer discretionary and bank stocks performed well after the rate cut, and Nvidia (NVDA) led a burgeoning tech rally today on news of its collaboration with Intel (INTC).
Source: Schwab Center for Financial Research
Morning Rush
The 10-year U.S. Treasury yield (TNX) is higher by 4 basis points to 4.116%.
The U.S. Dollar Index ($DXY) is higher by 0.54 to 97.42.
WTI Crude Oil (/CL) is essentially unchanged at $64.01/barrel.
Gold prices have traded in a range of $3,711.80-$3,739.90, last seen trading lower by 1.18% to $3,674.10/oz.
Natural Gas prices have traded in a range of $2.955-3.107 and were last seen trading lower by 4.42% to $2.963.
Bitcoin (BTC) is higher by ~0.99% today to $117,489.10.
Today's Bullish Activity
Shares of Intel Corp. (INTC + $6.14 to $31.04) are gapping up to a 52-week high this morning on news that the chip maker will partner with Nvidia to jointly develop PC and data center chips. Nvidia is also taking a $5B stake in INTC, making it one of the largest shareholders of the company. Nvidia’s investment follows a recent $2B investment from Softbank and a $5.7B investment from the U.S. government. Calls are outnumbering puts ~3:1, but the September 19th 30.00 call being the highest volume contract (volume is 59,603).
Also trading to the upside this morning is CrowdStrike Holdings Inc. (CRWD + $44.88 to $490.38) after the cybersecurity firm provided strong guidance yesterday at its Fal.com customer conference. CRWD reiterated that net new annual recurring revenue (ARR) will reaccelerate to 40% or more in the second half of fiscal 2026 and 20% or better ARR growth in fiscal 2027. Jefferies analyst Joseph Gallo said that this guidance “implied 22% total ARR growth in fiscal 2027 which is two points above consensus”. Additionally, CRWD reiterated a goal of $10B in subscription-based ARR by fiscal 2031 and established a new $20B ARR target for fiscal 2036, which suggests a 15% compound annual growth rate (CAGR). Calls are outnumbering puts ~5:3 with the September 19th 500.00 call seeing the most action from traders (volume is 6,049).
New 52-week highs (159 new highs today): AppLovin Corp. (APP + $21.78 to $628.44), Caterpillar Inc. (CAT + $8.72 to $459.38), Reddit Inc. (RDDT + $11.46 to $277.93)
Notable Call Activity
Some unusual call activity (~100:1 calls over puts) is being seen in LNG transportation company FLEX LNG Ltd. (FLNG + $0.04 to $24.97) as option traders primarily target the October 17th 27.00 call. Volume is 2,969 versus open interest of 206, so we know that the activity primarily represents fresh positioning. The bulk of the transactions consisted of various-sized blocks that were bought at various times for between $0.14-$0.19 each, which suggests bullish intent.
Today's Bearish Activity
Shares of Darden Restaurants Inc. (DRI - $19.44 to $189.35) are moving lower this morning after the parent company of Olive Garden reported fiscal Q1 earnings of $1.97 per share, excluding non-recurring items ($0.03 miss) on revenue that rose 10.4% year-over-year to $3.04B (in-line with analyst expectations). Looking ahead, the company reaffirmed fiscal-year 2026 EPS guidance of $10.50-10.70 (vs. the $10.69 FactSet consensus estimate) while raising its FY26 revenue guidance to a range of +7.5-8.5% (from +7-8%). Puts are outnumbering calls ~2:1 with the September 19th 200.00 put being the highest volume contract (volume is 3,030).
Also trading to the downside this morning is FactSet Research System Inc. (FDS - $14.16 to $321.88) after the financial digital platform reported fiscal Q4 earnings of $4.05 per share ($0.08 miss) on revenue that rose 6.2% year-over-year to $596.9M (above the $592.81M expected). The company issued downside guidance as FY26 EPS is expected to come in a range of $16.90-17.60 (below the $18.25 expected) on FY26 revenue that is expected to come in a range of $2.42-2.45B (vs. the $2.45 consensus estimate). Puts are outnumbering calls ~4:3 with the September 19th 320.00 put leading the way (volume is 380).
New 52-week lows (33 new lows today): Colgate-Palmolive Company (CL - $0.31 to $81.91), Constellation Brands Inc. (STZ - $0.12 to $132.92), Tradeweb Markets Inc. (TW - $1.68 to $115.53)
Notable Put Activity
Some unusual put activity (~140:1 puts over calls) is being seen in Ellington Financial Inc. (EFC - $0.01 to $13.22) which is primarily being driven by activity on the October 17th 12.50 put. Volume on this contract is 14,911 versus open interest of 2,382, so we know that the activity primarily represents opening activity. The bulk of the transactions consisted of various-sized blocks that were bought at various times for between $0.20-0.25 each, which suggests bearish intent.
Volume Signals
Acuren Corp. (TIC + $2.20 to $13.14): Option volume is running at over 3000x the daily average on this provider of critical asset integrity services which is primarily being driven by activity on the September 19th 8.00 call. Volume on this contract is 1,814 versus open interest of 482, so we know that the activity primarily represents fresh positioning. The transactions mostly consisted of various-sized blocks that were bought at various times for between $0.90-$1.40 each, which suggests bullish intent.
Q2 Holdings Inc. (QTWO + $1.81 to $84.80): Option volume is running at ~105x the daily average on this provider of digital solutions to financial institutions as option traders primarily target the October 17th 90.00 call. Volume on this contract is 3,348 versus open interest of 12, so it’s likely that nearly all the volume represents fresh positioning. The bulk of the activity consisted of various-sized blocks that were bought at various times for between $1.65-$1.85 each, which suggests bullish intent.
C.H. Robinson Worldwide Inc. (CHRW + $1.88 to $136.97): Option volume is running at ~6x the daily average on this provider of freight transportation and logistics services which is primarily being driven by a 1,300 contract block that was bought on the January 2026 150.00 call for $3.65 when the bid/ask spread was $3.30 x $3.70 (open interest is 75). We know that this block is a new position based on the open interest figure, and we can assume that the intent is bullish in nature since the trade took place above the midpoint of the bid/ask spread.
Gauging Volatility
The Cboe Volatility Index (VIX - 0.29 to 15.43) has been on both sides of the unchanged line today (intraday range is 14.33-15.80), as equity markets are higher across the board around the midday mark (DJI + 221, SPX + 47, COMP + 259). VIX option volume is below average today as the index is currently missing from the "Top Volume by Underlying" list. The volume put/call ratio is essentially even (~1.0) with the highest volume contract being the December 17th 14.00 put (volume is 89,118 vs. open interest of 37,075).
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