Today's Options Market Update
Stocks Muted Amid Earnings and Fed Chair Comments
Yesterday put Nvidia (NVDA) squarely in the spotlight. Friday shifted the focus to the mountains, where Federal Reserve Chairman Kevin Warsh unveiled his planned Jackson Hole remarks. Stocks are dipping but up so far this week as Warsh's remarks are being characterized as hawkish and he offered some details on what the Central Bank is watching to determine when to change monetary policy.
Warsh defended the Fed's 2% inflation goal with inflation above 3% and stressed that inflation is the most concerning and it will have a predominant focus on price stability. On communication, Warsh warned that overcommitting to future decisions can lead markets astray. Treasury yields are moving higher in the wake of his remarks and the U.S. dollar is gaining ground.
Major indexes soared Thursday after Nvidia impressed, but tech was the only sector to climb. Next week features earnings from Broadcom (AVGO) and a host of jobs data, crescendoing in next Friday's August nonfarm payrolls report. Early consensus is for a light gain of 45,000 jobs after July's surprise decline.
Source: Schwab Center for Financial Research
Morning Rush
The 10-year U.S. Treasury yield (TNX) is higher by ~6 basis points to 4.73%.
The U.S. Dollar Index ($DXY) is higher by 0.50 at 99.66.
WTI Crude Oil (/CL) prices are lower by 0.17% to $83.39/barrel.
Gold prices have traded in a range of $4,515.30-4,666.00 and were last seen trading lower by ~2.92% to $4,527.90/oz.
Natural Gas prices have traded in a range of $2.84-2.93 today and were last seen trading lower by 1.17% to $2.88.
Bitcoin (BTC) is lower by ~2.84% over the last 24 hours to $77,989.00 today.
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Today's Bullish Activity
Shares of Gap Inc. (GAP + $3.69 to $24.48) are gapping higher after the apparel retailer reported fiscal Q2 adjusted earnings of $0.52 per share ($0.04 beat), excluding the impact of tariff recovery from the IEEPA. However, Q2 revenue declined 2.0% year-over-year (y/y) to $3.65 billion, just below the FactSet consensus estimate of $3.69 billion, and comparable sales at stores open at least a year dipped 1.0% y/y, versus the forecasted 0.1% gain. Looking ahead, the company raised its full-year earnings outlook to $2.35-$2.45 versus prior guidance of $2.30-$2.40, while naming a new CEO of Old Navy, a brand that has struggled. Calls are outnumbering puts ~3:1 with the September 18th 22.00 call being the highest volume contract (volume is 3,794).
Also trading to the upside this morning is Affirm Holdings Inc. (AFRM + $8.94 to $86.43) after the "buy now pay later" company reported fiscal Q4 operating income of $353.4 million, above the FactSet consensus of $322.2 million, on revenue that jumped 32.93% y/y to $1.17 billion, topping the expected $1.11 billion. The company also offered fiscal Q1 revenue guidance that came in north of expectations. Calls are outnumbering puts ~2:1 with the September 18th 90.00 call being the highest volume contract (volume is 1,146).
New 52-week highs (53 new highs today): Acadian Asset Management Inc. (AAMI - $0.11 to $97.20), Investors Title Company (ITIC - $0.46 to $303.54), Marathon Petroleum (MPC + $0.81 to $364.35)
Notable Call Activity
Some unusual call activity (~100:1 calls over puts) is being seen in Keurig Dr Pepper Inc. (KDP + $0.46 to $32.34) as option traders primarily target the April 16th 2027 30.00 call. Volume on this contract is 2,000 (vs. open interest of 0), which consisted of various-sized blocks that were bought at various times between $4.16-$4.30 each. We know that this activity represents new positioning based on the open interest figure and we can assume that the intent is bullish since they took place near the ask price.
Today's Bearish Activity
Shares of Marvell Technology Inc. (MRVL - $17.95 to $223.78) are under pressure this morning after the semiconductor company reported fiscal Q2 adjusted earnings of $0.94 per share ($0.01 beat), on revenue that grew 37.0% y/y to $2.74 billion (vs an expected $2.72 billion). MRVL issued Q3 guidance that was roughly in line with the Street's expectations. Analysts appear to be disappointed by the small margin of MRVL's beats. Calls are modestly outnumbering puts with the October 16th 250.00 call being the highest volume contract (volume is 5,544).
Also trading to the downside this morning is PayPal Holdings Inc. (PYPL - $7.76 to $53.71) on reports that advent and Stripe have abandoned their $50.0 billion bid for the financial technology company. Calls are slightly outnumbering puts with the October 16th 60.00 call being the highest volume contract (volume is 6,072).
New 52-week lows (38 new lows today): Aptiv PLC (APTV - $0.24 to $45.20), Centerspace (CSR + $0.38 to $52.92), TJX Companies (TJX + $0.09 to $134.31)
Notable Put Activity
Some unusual put activity (~10:1 puts over calls) is being seen in Crown Castle Inc. (CCI + $0.33 to $75.36) which is primarily being driven by a 4,100 contract block on this real estate investment trust (REIT) that was sold on the September 17th 2027 75.00 put for $8.90. Open interest is 0 so we can assume this represents fresh positioning with neutral to bullish intent.
Volume Signals
NewAmsterdam Pharma Company (NAMS - $0.68 to $26.11): Option volume is running at ~11x the daily average on this biotech company as option traders primarily target the September 18th 30.00 call. Volume on this contract is 1,025 versus open interest of 286, so it's likely we have some fresh positioning here. Half of the volume consisted of a 708 contract block that was bought for $0.85, suggesting bullish intent.
Guardant Health Inc. (GH - $6.22 to $162.30): Option volume is running at ~9x the daily average on this oncology and biotech company which is primarily being driven by activity on the September 18th 150.00 put. Volume on this contract is 4,185 versus open interest of 129, so we know that nearly all the volume represents fresh positioning. The bulk of the volume is being attributed to a 4,000 contract block that was bought for $2.50, which suggests bearish intent.
Gauging Volatility
The Cboe Volatility Index (VIX + 0.01 to 14.52) has been on both sides of the unchanged market today (the intraday range is 14.13-14.81), as equity markets have turned lower around the midday mark (DJI - 46, SPX - 22, $COMP - 134, RUT - 33). VIX option volume has been above average today at 544,440 contracts, and calls are outpacing puts roughly 5:1 so far today.
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