Today's Options Market Update

Though the temporary ceasefire is "fragile" according to the Trump administration and the Strait of Hormuz hasn't reopened, investors applied their full attention to fresh U.S. data today. Stocks took a breather from yesterday's fierce rally after the February Personal Consumption Expenditures (PCE) price report showed 0.4% headline and core increases. Analysts had expected 0.4% headline growth and 0.3% for the core, which excludes food and energy. Annual core inflation—closely watched by the Federal Reserve—climbed 3%, in line with expectations.

"Inflation isn't showing signs of slowing, which is concerning given the situation in the Middle East," said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research (SCFR). "The longer oil remains elevated, the greater the possibility that it translates into higher inflation going forward. Since we're already at levels that are above the Fed's 2% target, it's likely concerning for the Fed."

Major U.S. indexes soared 2.5% Wednesday in a high-volume relief rally led by cyclical sectors like discretionary, industrials, info tech, and communication services that tend to do best in a strong economy. Still, it could take many weeks to get global supply chains on track, assuming the ceasefire lasts. If markets believe the strait will reopen and transit levels grow, the geopolitical risk premium likely stays lower. If not, crude can snap back. It remains well above pre-war levels and rose today as Iran and the U.S. traded ceasefire violation accusations and prepared for weekend talks.

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is higher by ~2 basis point to 4.317%.

The U.S. Dollar Index ($DXY) is lower by 0.19 to 98.94.

WTI Crude Oil (/CL) is higher by 7.90% to $101.87/barrel.

Gold prices have traded in a range of $4,718.60-4,802.80 and were last seen trading higher by ~0.25% to $4,789.30/oz.

Natural Gas prices for May futures have traded in a range of $2.698-2.738 today and were last seen trading lower by 0.77% to $2.703.

Bitcoin (BTC) is lower by ~0.59% over the last 24 hours to $70,671.69 today.

Shares of STAAR Surgical Co. (STAA + $5.24 to $26.12) are moving higher this morning after the maker of phakic implantable eye lenses said that Q1 net sales are expected to be “in excess of $90M” versus net sales of $42.6M in the year-ago quarter. The company said that China accounted for the majority of the increase in net sales, along with continued double-digit growth in the Americas. Canaccord Genuity upgraded STAA to Buy from Hold and increased their price target on the stock to $27.00 from $22.00. Calls are outnumbering puts ~3:1 with the April 17^th 27.50 call leading the way (volume is 397).

Also trading to the upside this morning is Marvell Technology Inc. (MRVL + $5.30 to $119.75) after Barclays upgraded the chip maker to “Overweight” from “Equal Weight” and put a $150.00 price target on the stock. Analysts at Barclays cited the company’s dominant and expanding position in custom silicon and AI data-center infrastructure, bolstered by its $2B partnership with Nvidia. Calls are outnumbering puts better than 3:1 with the April 10^th 125.00 call seeing the most action from traders (volume is 6,145).

New 52-week highs (141 new highs today): Alcoa Corp. (AA + $2.00 to $73.76), Entergy Corp. (ETR + $2.41 to $117.02), Intel Corp. (INTC + $1.69 to $60.64)

Some unusual call activity (~100:1 calls over puts) is being seen in Aflac Inc. (AFL + $0.03 to $113.03) as option traders primarily target the April 10^th 114.00 call. Volume on this contract is 2,098 versus open interest of 89, so it’s likely that nearly all the volume represents fresh positioning. The bulk of the transactions consisted of various-sized blocks that were bought at various times for between $0.20-0.50 each, which suggests bullish intent.

Shares of Bullish Inc. (BLSH - $2.68 to $35.95) are moving lower this morning after Rosenblatt downgraded the global digital asset platform to “Neutral” from “Buy”, while maintaining their $39.00 price target on the stock. Analysts at Rosenblatt cited valuation for the move, noting that the stock no trades at 28-times consensus adjusted EBITDA estimates. Calls are outnumbering puts ~4:1 with the June 16^th 60.00 call being the highest volume contract (volume is 85).

Also trading to the downside is GitLab Inc. (GTLB - $1.34 to $20.00) after Guggenheim Securities downgraded the software firm to “Neutral” from “Buy” and removed its $50.00 price target on the stock. Analysts at Guggenheim cited more pronounced AI risks and a lack of near-term catalysts. Calls are outpacing puts ~4:1 with the May15^th 25.00 call seeing the most action from traders (volume is 1,032).

New 52-week lows (99 new lows today): Accenture PLC (ACN - $7.72 to $184.49), Axon Enterprises Inc. (AXON - $26.81 to $364.72), Salesforce Inc. (CRM - $7.15 to $169.22)

Some unusual put activity (~6:1 puts over calls) is being seen in Chipotle Mexican Grill Inc. (CMG - $0.02 to $33.77) which is primarily driven by a 15,150 contract block that was sold on the May 15^th 27.50 put at the bid price of $0.34 (open interest is 1,851). We know that this block is a new position based on the open interest figure, and the put sale suggests that the block trader believes CMG will close above the $27.50 price level and/or is comfortable taking a long 1,515,000 share position in the stock at an effective purchase price of $27.16 if CMG closes below $27.50 at expiration.

Wolfspeed Inc. (WOLF + $3.16 to $23.72): Option volume is running at ~12x the daily average on this silicon carbide-focused chip maker as option traders primarily target the April 17^th 30.00 call. Volume on this contract is 1,592 versus open interest of 118, so we know that the volume primarily represents fresh positioning. The bulk of the transactions consisted of various-sized blocks that were bought at various times for between $0.20-0.30 each, which suggests bullish intent.

Invesco Ltd. (IVZ - $0.54 to $23.67): Option volume is running at ~6x the daily average on this investment management company which is primarily being driven by a couple of large blocks that simultaneously traded on the May 15^th expiration earlier this morning:

• 24.00 call (open interest is 67): A 10,000 contract block was bought for $1.17 when the bid/ask spread was $1.10 x $1.20.
• 26.00 call (open interest is 192): A 10,000 contract block was sold for $0.44 when the bid/ask spread was $0.40 x $0.55.

We know that both these blocks are new positions based on the respective open interest figures, and it appears that a $2.00-wide bull call spread was established for a net debit of $0.73 (x 10K contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that IVZ will close above the break-even price of $24.73 at expiration.

Gates Industrial Corp. (GTES + $0.42 to $24.93): Option volume is running at ~5x the daily average on this provider of engineered power transmission and fluid power solutions which is primarily driven by a couple of large blocks that were bought at the same time on the May 15^th 24.00 put – a 1,200 contract block was bought for $1.10 and an 800 contract block was bought for $1.15 when the bid/ask spread was $0.90 x $1.15 (open interest is 37). We know that these blocks are new positions based on the open interest figure, and we can assume that the intent is bearish in nature since both trades took place above the midpoint of the bid/ask spread.

The Cboe Volatility Index (VIX - 0.77 to 20.27) has been on both sides of the unchanged line today (the intraday range is 20.20-21.63), as equity markets are lower across the board around the midday mark (DJI - 259, SPX - 35, $COMP - 182). VIX option volume is below average today at 242,789 contracts, and calls are outnumbering puts ~3:2 so far today.