Today's Options Market Update

AI Shares Spark New Year's Rally After 4-Day Slump

January 2, 2026 Joe Mazzola

After four straight losing sessions to finish 2025, the new year begins with major indexes rising thanks to strength in the AI sector. Next week features a host of U.S. jobs data.

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The traditional "Santa Claus rally" period didn't end with the old year, and 2026 rang in with stocks up on tech sector strength after trending lower all week. There's still a chance for gifts instead of coal in the stockings, depending on how today and Monday go. The early rally might reflect positive vibes from Asia, where Baidu's (BIDU) AI unit filed for an initial public offering, or IPO. Chip stocks were among the early leaders on Wall Street.

In trading parlance, the old joke about markets falling because of more sellers than buyers might help explain this week's action before today considering little news of note. Wednesday's fourth straight drop in the S&P 500 index (SPX) put it fractionally lower for December, making it the first month since April to finish in the red. At one point Wednesday, more than 90% of S&P 500 stocks traded lower. That's the kind of trading typically seen during deep market dives like the Covid sell-off in early 2020 or the tariff tantrum last April. Even so, the S&P 500 index rose 16% last year and the tech-heavy Nasdaq 100 (NDX) gained more than 20%.

If there's anything positive to take out of the week leading into today, it's that major indexes remain only around 1% below all-time highs, nearly 60% of S&P 500 stocks trade at or above their 200-day moving average, and volume was less than two-thirds of normal levels lately. Low volume often translates into light conviction, meaning the downturn might be discounted when full participation returns Monday. History shows that losses during the Santa Claus period are often followed by weak Januarys. That said, past isn't precedent.

Source: Schwab Center for Financial Research

Morning Rush

The 10-year U.S. Treasury yield (TNX) is up 3 bps to 4.18%.

The U.S. Dollar Index ($DXY) is higher by 0.12% at 98.44.

The CBOE Volatility Index^® (VIX) is down marginally to 14.83.

WTI Crude Oil (/CL) is lower by 0.70% to $57.02/barrel.

Bitcoin (BTC) is higher by 3.23% to $90,725.

Ethereum (ETH) is up by 5.00% at $3,136.

Today's Bullish Activity

Shares of Ironwood Pharmaceuticals (IRWD + $1.40 to $4.77) are up over 40.00% in morning trading, to a 52-week high, after the biotechnology company released financial guidance for the full year 2026 that topped analyst forecasts. Included in the report was guidance for its expected 2026 Linzess U.S. net sales of $1.125 billion-$1.175 billion and total revenue expectations of $450 million-$475 million. Analysts had estimated revenue of $319.3 million. Lizness is the company's irritable bowel syndrome drug which it develops and commercializes in the U.S. with AbbVie. Per MT Newswire, the FDA recently approved Linzess as a treatment for children aged seven years and older.

Option trading in IRWD currently stands at 3,802 contracts, 115x the average daily volume with calls outpacing puts 4:1. Leading the way are the following trades, expirations, and strikes:

January 16th, 2026, 4.00 call accounted for 741 contracts; open interest is 645 contracts.
January 16th, 2026, 5.00 call accounted for 722 contracts; open interest is 27 contracts.
January 16th, 2026, 7.50 call accounted for 635 contracts; open interest is two contracts.

New 52-week highs (110 new highs today): Sidus Space Inc. (SIDU + $1.18 to $4.32), Ironwood Pharmaceuticals (IRWD + $1.40 to $4.77), Micron Technology (MU + $26.50 to $311.91), Taiwan Semiconductor (TSM + $14.96 to $318.85)

Notable Call Activity

Unusual call activity is noted today in Baidu Inc. (BIDU + $16.64 to $147.30), as call volume currently stands at 46,648 contracts, 13x the average daily volume and 3x the put volume. Over 1/3 of today's activity occurred in the January 9th,and the January 16th, 2026, expiration months, with the 135.00, 150.00, and 160.00 strike calls generating the most interest. While trading has been two-sided, traders have tended to lean more on the sell side of the OTM strikes, suggesting they may be fading the move. One example trade occurred in the January 9th expiration, at the 160.00 strike, where traders sold 973 of the 160.00 strike calls at $0.85, the bid price at the time. Shares of BIDU are up over 13% today, just slightly below their 52-week high price of $149.51, following news the company plans to list its Artificial Intelligence chip unit Kunlunx for a public offering on the Hong Kong exchange.

Another name exhibiting unusual activity today is Patterson-Uti Energy (PTEN + $0.24 to $6.35), as call volume has spiked to 5,091 contracts in morning trading, 100x the average volume and 500x the put volume. Traders are active in the January 16th, 2026, expiration month, specifically at the 6.00 and 7.00 strike calls, where 2,500 call spreads (5,000 total contracts) were purchased in a single block transaction. Traders bought the 6.00/7.00 call spread for a price of $0.30 when the bid/ask was $0.15 x $0.40. With total collective open interest of 4,100 contracts, this appears to be a roll down, as traders rolled their long calls down from the 7.00 strike to the 6.00 strike. This is a bullish trade, as the traders are adding delta, directional risk, to their positions. Shares of PTEN rallied above their 200-day SMA on Wednesday and appear to be continuing to move higher in today's trade.

Today's Bearish Activity

Shares of Outlook Therapeutics (OTLK - $0.89 to $0.69) are down a staggering 56.00% today, trading at a 52-week low, after the U.S. Food and Drug Administration again rejected its Lytenava filing for wet AMD (age-related macular degeneration), citing insufficient evidence of effectiveness. The FDA's response indicated that the application of Lytenava could not be approved in its present form. Wet AMD, according to Bloomberg, is a severe form of AMD where abnormal blood vessels grow under the retina, leaking blood and fluid, causing rapid central vision loss, characterized by wavy lines, dark spots, or blurred vision.

Per the Bloomberg report, Outlook Therapeutics is exploring all available pathways for potential approval in the U.S. and intends to continue its efforts to expand into additional markets in Europe and other regions.

Option trading in OTLK currently stands at 8,145 contracts in morning trading, on pace for 2x the daily average, with calls and puts basically even. Leading the way are the following trades, expirations, and strikes:

January 16th, 2026, 1.00 put accounted for 2,321 contracts; open interest is 8,171 contracts.
January 16th, 2026, 0.50 put accounted for 733 contracts; open interest is 5,534 contracts
January 16th, 2026, 1.00 call accounted for 548 contracts; open interest is 271 contracts.

New 52-week lows (39 new lows today): AMC Entertainment Holdings (AMC - $0.03 to $1.55), Outlook Therapeutics (OTLK - $0.89 to $0.69), Copart Inc. (CPRT - $1.50 to $37.65), Workday Inc. (WDAY - $12.34 to $202.44)

Notable Put Activity

There is unusual put activity today in Liquidia Corp. (LQDA - $3.08 to $31.41). This activity equates to over 15,892 put contracts, 5x average daily put volume and 3x today's call volume. Over 1/3 the volume can be attributed to a large put vertical spread in the January 16th, 2026, expiration. Traders purchased 2,500 put verticals (5,000 contracts total), incorporating the 30.00 and 15.00 strikes in a single block transaction $1.45 for the put vertical when the bid/ask was $0.25 x $1.50. The 30.00 strike appears to be a new long position while the 15.00 strike appears to be a closing short position, both based on the open interest (suggesting bearish intent). Shares of LQDA are currently at their lowest level in a month.

Unusual activity has also been detected in Zillow Group Inc. (Z - $2.30 to $65.92), as put volume stands at 8,884 contracts, 8x average volume and 20x call volume, in morning trading. Much of the volume can be attributed to a sales of the 65.00 strike in the January 16th, 2026, expiration month. Traders have used multiple block trades to sell 65.00 strike puts at an average price of $0.90 each. The open interest was 4,324, so these trades could be a combination of closing and opening positions. Either way, they do suggest traders may be predicting a potential bottoming around these current price levels. Shares of Z hit a near-term low price of $65.07 on December 15th before bouncing. The 52-week low price is $57.51.

Gauging Volatility

The Cboe Volatility Index (VIX - 0.11 to 14.83) is marginally lower, down 0.80%, as equity markets are mixed in morning trading (DJI + 75, SPX - 9, COMPX - 61). VIX movement has occurred within a narrow range today (the intraday range is 14.57 to 15.42). The highest volume contract is currently the February 18th, 2026, 20.00 call (volume is 16,201 vs. open interest of 63,528).

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