Today's Options Market Update

With fresh tariff threats in the news, the Federal Reserve starting its meeting, and a full plate of earnings on tap, major indexes initially built on yesterday's gains early Tuesday, lifted by tech. However, rallies in slumping stocks like Meta Platforms (META) and Apple (AAPL) seemed predicated on solid quarterly results from them later this week, so investors await proof even with indexes approaching record highs.

Earnings from General Motors (GM), Boeing (BA), and UnitedHealth (UNH) vied for attention early, with health insurers taking a sharp blow from the U.S. government's proposed small raise in payments for Medicare Advantage insurers. Meanwhile, as data center and AI-related firms report starting late tomorrow, spending will be under scrutiny. Capital expenditure guidance will be interesting for hyperscalers, regarding companies growing their AI data center capability. Markets likely want 'not too hot, not too cold' capex guidance.

Most S&P 500 sectors climbed Monday, possibly on hopes for solid Magnificent Seven earnings and ideas that geopolitical bumps might be smoothing. A call between President Trump and Minnesota Gov. Tim Walz eased some market worries over domestic tension, Barron's reported. Though things quieted slightly at home, Trump's threat to lift tariffs to 25% from 15% on imports of South Korean autos, pharmaceuticals, and lumber brought new uncertainty. So did news of a major free-trade deal between Europe and India, which some analysts saw as a response to Trump's tariffs.

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is slightly higher to 4.219%.

The U.S. Dollar Index ($DXY) is lower by 0.77 to 96.27.

WTI Crude Oil (/CL) is higher by 2.08% to $61.89/barrel.

Gold prices have traded in a range of $5,043.90-5139.40 and were last seen trading higher by ~0.22% to $5,133.70/oz.

Natural Gas prices have traded in a range of $5.772-6.881 today and were last seen trading lower by 10.38% to $6.094.

Bitcoin (BTC) is higher by ~0.29% to $88,514.94 today.

Shares of General Motors Inc. (GM + $4.67 to $84.10) are moving higher this morning after the auto maker reported Q4 adjusted EPS of $2.51 ($0.24 beat) on Q4 revenue of $45.29B (below the $46.22B FactSet consensus estimate). Concurrent with the earnings release, GM announced a 20% increase in the quarterly dividend along with a new $6B share buyback program. Looking ahead, the company guided fiscal 2026 adjusted EPS to a range of $11.00-13.00 versus the $11.95 FactSet consensus estimate. Calls are outnumbering puts ~2:1 with the January 30^th 85.00 call seeing the most action from traders (volume is 4,173).

Also trading to the upside this morning is HCA Healthcare Inc. (HCA + $42.11 to $514.49) after the health care provider reported Q4 adjusted EPS of $8.01 ($0.58 beat) on Q4 revenue of $19.513B (slightly below the $19.667B expected). Regarding guidance, the company raised its full-year 2026 adjusted EPS to a range of $29.10-31.50 from $27.00-28.00, with FY26 revenue expected to come in a range of $76.50-80.0B (vs. the $79.04B FactSet consensus estimate). Puts are outnumbering puts ~3:2 with the February 20^th 430.00 put leading the way (volume is 1,369).

New 52-week highs (199 new highs today): Amphenol Corp. (APH + $7.07 to $162.63), Gilead Sciences Inc. (GILD + $3.50 to $141.28), KLA-Tencor Corp. (KLAC + $68.88 to $1,611.91)

Some unusual call activity (~6:1 calls over puts) is being seen in Lumen Technologies Inc. (LUMN + $0.78 to $9.41) as option traders primarily target the January 30^th 10.00 call. Volume on this contract is 22,185 versus open interest of 2,470, 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 $0.07-0.21 each, which suggests bullish intent.

Shares of Boeing Corp. (BA - $6.97 to $241.46) are trading lower this morning even though the plane maker reported better-than-expected quarterly results. The company reported Q4 adjusted EPS of $9,92 (vs. the FactSet estimate of -$0.44) on Q4 revenue $23.95B (above the $22.60B FactSet consensus estimate). The significant EPS beat was assisted by a $9,6B gain from the sale of portions of its Digital Aviation Solutions business during the quarter. Q4 deliveries increased 181% year-over-year (YoY) to 160 aircrafts. Calls are outpacing puts better than 2:1 with the January 30^th 250.00 call being the highest volume contract (volume is 19,051).

Also trading to the downside today is United Health Inc. (UNH - $64.54 to $287.09) after the health insurer reported Q4 adjusted EPS of $2.11 ($0.10 beat) on revenue that increased 12% YoY to $113.20B (slightly below the $113.80B FactSet consensus estimate). The large drop in UNH, along with other health insurers, is also driven by an announcement after the bell yesterday that the Trump Administration plans on keeping Medicare Advantage rates roughly flat in 2027, which was below analyst expectations. Calls are outnumbering puts ~3:2 with the January 30^th 290.00 call seeing the most action from traders (volume is 20,291).

New 52-week lows (124 new lows today): Cable One Inc. (CABO - $1.78 to $77.06), Docusign Inc. (DOCU - $2.10 to $55.56), Humana Inc. (HUM - $53.25 to $210.38)

Some unusual put activity (~3:1 puts over calls) is being seen in Nutrien Ltd. (NTR + $0.35 to $70.58) which is primarily driven by activity on two contracts on the February 6^th expiration:

• 69.00 put (volume is 1,300 vs. open interest of 208): Contracts were bought around the same time at the ask price of $0.85 each (suggesting bearish intent).
• 67.00 put (volume is 2,286 vs. open interest of 2): The bulk of the volume is being attributed to a 1,760 contract block that was bought for $0.42 when the bid/ask spread was $0.30 x $0.45 (suggesting bearish intent).
   

Resideo Technologies Inc. (REZI - $1.34 to $33.94): Option volume is running at ~32x the daily average on this provider of energy management, safety and security solutions which is primarily driven by a 2,390 contract block that was bought on the February 20^th 40.00 call for $1.60 when the bid/ask spread was $0.05 x $2.20 (open interest is 312). 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.

Five Below Inc. (FIVE - $2.22 to $186.35): Option volume is running at ~13x the daily average on this discount retailer which is primarily driven by a 3,480 contract block was sold on the February 20^th 160.00 put for $0.96 when the bid/ask spread was $0.75 x $1.25 (open interest is 228). We know that this block is a new position based on the open interest figure, and we can assume that the block trader believes FIVE will close above the $160.00 price level and/or is comfortable taking a long 348,000 share position in the stock at an effective purchase price of $159.04 if FIVE closes below $160.00 at expiration.

Carmax Inc. (KMX + $0.87 to $46.01): Option volume is running at ~12x the daily average on this auto retailer as option traders primarily target the March 20^th 50.00 call. Volume on this contract is 16,287 versus open interest of 7,778, so we know that the volume primarily represents new positioning. The bulk of the transactions consisted of various-sized blocks that were bought at various times for between $1.60-$2.00 each (including a 4,790 contract block that was bought for $1.85 when the bid/ask spread was $1.30 x $1.90), which suggests bullish intent.

The Cboe Volatility Index (VIX – 0.03 to 16.12) has been on both sides of the unchanged line today (the intraday range is 15.74-16.27), as equity markets are mixed around the midday mark (DJI - 504, SPX + 29, $COMP + 220). VIX option volume is average today at 336,993 contracts, and calls are outnumbering put better than 5:1 s so far today.