Today's Options Market Update

Big banks kicked off earnings season with better-than-expected results, but new tensions with China spoiled the party Tuesday and Wall Street surrendered most of Monday's tech-driven gains. The U.S. and China are now charging additional port fees on ocean shipping firms, threatening to raise prices on all sorts of goods and fueling concerns that both countries are upping the ante ahead of a new round of trade negotiations.

China also has sanctioned five U.S. subsidiaries of a South Korean shipbuilder, Bloomberg reported. "An escalation in U.S.-China trade tensions was surprising as it looked like relations were warming," said Michelle Gibley, director of international research at the Schwab Center for Financial Research. "The moves by both China and the U.S. may be posturing ahead of a meeting between President Xi and President Trump. Both sides have incentive to come to a trade deal, but there could be more volatility until we see agreements signed or another extension of the trade truce."

As volatility resumed climbing this morning on trade worries, Federal Reserve Chairman Jerome Powell delivers a speech on the economic outlook and monetary policy at 12:20 p.m. ET. This comes with the market almost fully pricing in a 25-basis point rate cut late this month and another in December, according to the CME FedWatch Tool. The Fed's job is harder thanks to the data black hole caused by the government shutdown, and assuming there's no resolution by October 16, federal workers will begin to miss paychecks. "That could change the tenor of talks in the Senate, where an ad hoc group of Republicans and Democrats have been holding informal conversations about crafting an exit strategy," said Michael Townsend, managing director, legislative and regulatory affairs at Schwab.

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is slightly lower to 4.048%.

The U.S. Dollar Index ($DXY) is lower by 0.11 to 99.15.

WTI Crude Oil (/CL) is lower by 1.95% to $58.33/barrel.

Gold prices have traded in a range of $4,105.00-$4,190.90, last seen trading higher by ~0.56% to a fresh all-time high of $4,156.20/oz.

Natural Gas prices have traded in a range of $3.02-3.106 today and were last seen trading lower by 1.92% to $3.058.

Bitcoin (BTC) is lower by ~3.42% to $111,331.60 today.

Shares of Domino's Pizza Inc. (DPZ + $13.29 to $421.55) are moving higher this morning after the pizza delivery giant reported Q3 earnings of $4.08 per share, excluding non-recurring items ($0.11 beat) on revenue that rose 6.2% year-over-year (YoY) to $1.15B (above the $1.14B FactSet consensus estimate) as U.S. same-store sales increased 5.2% YoY. Calls and puts are trading roughly even with the October 17^th 400.00 put seeing the most action from traders (volume is 579).

Also trading to the upside this morning is Wells Fargo & Co. (WFC + $5.52 to $84.44) after the financial services provider reported Q3 earnings of $1.66 per share, excluding non-recurring items ($0.11 beat) on revenue that rose 5.3% YoY to $21.44B (above the $21.15B FactSet consensus estimate). The company’s Q3 net interest income (NII) increased 2.0% YoY. Regarding guidance, the bank said that it is targeting 17-18% return on tangible common equity (ROTCE) over the medium, up from its prior expectation of 15%. Calls are outnumbering puts ~2:1 with the October 17^th 84.00 call being the highest volume contract (volume is 10,648).

New 52-week highs (71 new highs today): BWX Technologies Inc. (BWXT + $4.58 to $201.95), Oklo Inc. (OKLO + $1.86 to $172.87), Southern Company (SO + $1.32 to $99.40)

Some unusual call activity (~20:1 over puts) is being seen in Cerence Inc. (CRNC + $1.49 to $12.80) as the top eight highest volume contracts are calls today. Topping the list is the October 17^th 13.00 call as volume is 2,316 versus open interest of 751. The bulk of the transactions consisted of various-sized blocks that were bought around the same time at the ask price of $0.35 each, which suggests bullish intent. CRNC provides AI-powered virtual assistants to the mobility/transportation markets.

Shares of The Goldman Sachs Group Inc. (GS - $16.60 to $770.18) are moving lower this morning even though the investment banking giant beat quarterly estimates earlier this morning. GS reported Q3 earnings of $12.25 per share ($1.22 beat) on revenue that rose 19.0% YoY to $15.18B (above the $14.12B FactSet consensus estimate). The company’s Q3 investment banking fees increased 42% YoY and Q3 provision for credit losses declined to $339M from $384M in the prior quarter. Calls are outnumbering puts ~5:3 with the October 17^th 800.00 put garnering the most attention from traders (volume is 2,556).

Also trading to the downside this morning is Albemarle Corp. (ALB - $2.20 to $94.19) after Bank of America downgraded the lithium producer to “Neutral” from “Buy” while bumping their price target up to $100.00 from $95.00. Bank of America analyst Matthew DeYoe said that the stock is “fairly valued” following the recent rally on the heels of the U.S. government’s investment in Thacker Pass and export restriction headlines on Chinese lithium batteries. Calls are outnumbering puts ~5:2 with the October 17^th 95.00 call being the highest volume contract (volume is 538).

New 52-week lows (124 new lows today): Biomarin Pharmaceuticals Inc. (BMRN - $0.52 to $51.93), Ferrari N.V. (RACE - $1.64 to $377.08), Owens Corning Inc. (OC - $0.18 to $125.15)

Some unusual put activity (~8:1 puts over calls) is being seen in Illumina Inc. (ILMN - $5.09 to $89.94) which is primarily driven by activity on the October 17^th 90.00 put. Volume on this contract is 2,142 versus open interest of 361, 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 $1.70-3.70 each, which suggests bearish intent. Shares of ILMN are trading at a three-month low this morning.

Tsakos Energy Navigation Ltd. (TEN + $0.04 to $21.31): Option volume is running at ~72x the daily average on this provider of seaborne crude oil and petroleum product transportation services which is primarily being driven by a 3,000 contract block that was bought on the November 21^st 22.50 call for $0.70 when the bid/ask spread was $0.55 x $0.80 (open interest is 16). 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 trades took place above the midpoint of the bid/ask spread.

DigitalBridge Group Inc. (DBRG + $1.76 to $13.41): Option volume is running at ~48x the daily average on this global alternative asset manager as option traders primarily target the January 2026 17.00 call. Volume on this contract is 28,908 versus open interest of 933, 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 $0.65-1.00 each, which suggests bullish intent.

Ero Copper Corp. (ERO + $0.70 to $23.41): Option volume is running at ~20x the daily average on this Brazilian miner as option traders primarily target the November 21^st 30.00 call. Volume on this contract is 13,171 versus open interest of 99, so it’s likely that nearly all the volume represents new positioning. The bulk of the transactions consisted of various-sized blocks that were bought at various times for between $0.35-0.70 each, which suggests bullish intent.

The Cboe Volatility Index (VIX + 1.06 to 20.09) has been in positive territory all day today (intraday range is 19.85-22.94), as equity markets are mixed around the midday mark (DJI + 172, SPX - 6, COMP - 118). VIX option volume is above average today at 671,647 contracts, which puts the index at the #8 spot on the "Top Volume by Underlying" list. The volume put/call ratio is currently 0.64 with the highest volume contract being the October 22^nd 35.00 call (volume is 49,323 vs. open interest of 201,897).