Today's Options Market Update
Defense Stocks Rally on NATO Russian Rhetoric
Defense stocks rallied as NATO countries consider getting more involved in the Russia-Ukraine war after President Trump suggested a more aggressive approach to protecting NATO airspace from Russian aggression. American aerospace manufacturer Redwire (RDW) rallied 13.69% in pre-market trading. The company supplies drones and other military equipment to European countries and may benefit if the war escalates. Intuitive Machines (LUNR) also rallied 1.16% ahead of the opening bell.
The CBOE Volatility Index futures are elevated from their September lows around the 15.5 level, currently trading at 18.2. A level of resistance appears to have formed at 18.5, which could be a pivotal signal for investors because a break of resistance signals greater volatility in stocks and potential pullback.
The major averages were lower on Tuesday as mega-cap stocks pulled back from Monday's price surge and as investors digested Federal Reserve Chairman Jerome Powell's assessment that "equity prices are fairly highly valued." The CRSP U.S. Mega Cap TR Index (CRSPMET) fell 0.7%, ending a three-day win streak. The index was weighed down by Amazon (AMZN), which tumbled 3.04%, causing the stock price to move below its 50-day moving average for the first time since early August. Tech darling NVIDIA (NVDA) closed 2.82% lower, and Oracle (ORCL) fell 4.36%.
Source: Schwab Center for Financial Research
Morning Rush
The 10-year U.S. Treasury yield (TNX) is higher by 5 basis points to 4.14%.
The U.S. Dollar Index ($DXY) is trading higher at 97.87.
The CBOE Volatility Index® (VIX) is down slightly to 16.61.
WTI Crude Oil (/CL) is higher by 2.50% to $65.00/barrel.
Bitcoin (BTC) is higher by 2.07%, trading at $114,030.
Ethereum (ETH) is higher by 1.04% today to $4,200.
Today's Bullish Activity
Shares of Lithium Americas Corp. (LAC + $2.97 to $6.04) are up a staggering 96% today, to their highest price since April 2024 after reports the Trump administration is pursuing a stake in the company. Per Bloomberg, the White House has proposed taking equity in the Canadian lithium company during a renegotiation of the terms of a $2.3 billion loan extended by the Energy Department. That followed an earlier Reuters report that the administration was seeking a stake of as much as 10%. Following the report, Lithium Americas confirmed it's in discussions with the Energy Department and joint-venture partner General Motors Holdings LLC over "potential further conditions" relating to the first drawdown of the loan.
Share volume in LAC already stands at 235,965,542 shares, making it the most active listing on the NYSE. Option trading in LAC currently stands at 301,094 contracts, 75x the daily average, with calls outpacing puts 6:1. Leading the way are the following trades, expirations, and strikes:
- October 17th, 2025, 5.50 call accounted for 55,641 contracts; open interest is six contracts.
- October 17th, 2025, 7.50 call accounted for 28,056 contracts; open interest is zero contracts.
- November 21st, 2025, 7.50 call accounted for 26,024 contracts; open interest is zero contracts.
New 52-week highs (212 new highs today): Rigetti Computing Inc. (RGTI + $1.34 to $32.80), Lithium Americas Corp. (LAC + $2.97 to $6.04), D-Wave Quantum Inc. (QBTS + $0.42 to $28.00), Iren Limited (IREN + $6.40 to $48.17), Riot Platforms Inc. (RIOT + $0.97 to $18.04)
Notable Call Activity
Unusual call activity is noted today in Encore Energy Corp. (EU + $0.13 to $3.22), as call volume currently stands at 30,344 contracts, 15x the average daily volume and 3,000x today's put volume. November 21st, 2025, and April 17th, 2026, expiration months. Traders bought 10,000 of these calendar spreads (20,000 total contracts) at the 4.00 strike, paying $0.35 for the transaction, when the bid/ask was $0.15 x $0.35. The collective open interest was only 1,700 contracts, so we know this is new positioning (suggesting bullish intent). Call calendars expand to their greatest value at the strike, so traders purchasing these calendars likely expect EU shares to continue to rise toward the $4.00 level.
Another name exhibiting unusual activity today is Arbor Realty Trust Inc. (ABR + $0.09 to $11.97), as call volume has spiked to 54,704 contracts in morning trading, 8x daily average. September 19th, 2025, expiration is the busiest, specifically at the 12.50 strike, where over 45,507 contracts have already traded. Most of the volume has been directionally bullish with prices ranging from $0.04 to $0.08. Open interest for the strike was only 397 contracts, so we know this represents new positioning. In addition, the put/call ratio today is 0.01 indicating a heavy bias to call volume.
Today's Bearish Activity
Shares of Freeport McMoran Inc. (FCX - $5.44 to $39.92) are down over 11% today after the mining company announced force majeure was declared on contracted supplies from its giant Grasberg mine in Indonesia, the second-largest source of the metal. Force majeure is a clause in contracts which frees the party from legal obligation due to some extraordinary event, circumstance, or act of God. The Grasberg mine accounted for about 3.2% of mined copper supply for this year prior to the disruptions, according to Grant Sporre, global head of metals and mining at Bloomberg Intelligence. It contributes nearly 30% of Freeport's total copper production and 70% of gold output.
Freeport has cut its copper and gold sales guidance for the quarter, as it continues to search for five missing workers following an accident at the site two weeks ago. Two employees are confirmed to have died following a flow of about 800,000 metric tons of mud into Grasberg's underground levels. Following Freeport's announcement, futures copper prices for delivery in three months rose as much as 3.7% to $10,341 a ton on the London Metal Exchange, the biggest intraday jump since April 10.
Option trading in FCX currently stands at 152,874 contracts in morning trading, on pace for 8x the daily average, with calls outpacing nearly 2:1. Leading the way are the following trades, expirations, and strikes:
- October 17th, 2025, 44.00 call accounted for 10,615 contracts; open interest is 1,126 contracts.
- October 17th, 2025, 40.00 put accounted for 3,982 contracts; open interest is 11,550 contracts.
- October 17th, 2025, 38.00 put accounted for 3,798 contracts; open interest is 1,286 contracts.
New 52-week lows (62 new lows today): Amcor PLC (AMCR - $0.02 to $8.07), Iveda Solutions Inc. (IVDA - $0.24 to $1.27), Diageo PLC (DEO - $0.94 to $95.39), Americold Realty Trust (COLD - $0.18 to $12.46)
Notable Put Activity
There is unusual put activity today Fuelcell Energy Inc. (FCEL - $0.18 to $8.90). This activity equates to over 8,635 put contracts, 7x average daily put volume. Traders are very active in the September 26th, 2025, expiration month, specifically at 7.50 and 8.00 strike puts where over 8,000 contracts have traded collectively through multiple block orders. Most of the activity was on the buy side with traders paying near the offer price in both strikes. This follows a major move in FCEL shares, doubling their value in the past two weeks. Perhaps traders are hedging the massive move.
Another example of unusual put activity occurred today in Sanmina Corp. (SANM - $4.00 to $113.49), as put volume stands at 5,842 contracts in morning trading, 190x average daily volume. Most of the volume stems from the October 17th, 2025, expiration month, where a put vertical spread was bought 2,709 times (5,418 contracts in total) through a single block order. Traders paid $2.50 for the spread, slightly below the mid-price when the bid/ask was $0.70 x $5.00. The wide bid/ask suggests very little liquidity at the strikes. Open interest for the strikes was 504 contracts, collectively, so we know this represents new positioning (suggesting bearish intent). Shares of SANM currently sit right at their 50-day SMA.
Gauging Volatility
The Cboe Volatility Index (VIX - 0.03 to 16.61) is basically unchanged in morning trading, as equity markets are down across the board (DJI - 90, SPX - 16, COMPX - 73). VIX movement has occurred within a narrow range today (the intraday range is 16.27 – 17.21). The highest volume contract is the October 22nd, 2025, 23.00 call (volume is 20,162 vs. open interest of 145,971).
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