Today's Options Market Update

There's plenty of business ahead before investors tuck into their Thanksgiving meals. A host of Treasury auctions, several data points, and a handful of earnings reports line the path toward Thursday's holiday closure, while caution remains after last week's sell-off took the S&P 500 index down 2%. Stocks built on Friday's gains overnight, and the next two days might tell most of this week's story before many participants head out ahead of the break.

The market's recent descent to two-month lows reflects wobbles in the crypto market, sudden risk-off sentiment, less clarity about the economy, possible late-year profit taking, and cloudiness surrounding the Federal Reserve's next move. The Fed fog lifted slightly on Friday after New York Fed President John Williams sounded amenable to a near-term rate cut, and the CME FedWatch Tool now builds in 73% odds of a December easing. That doesn't square with some expert views. "Williams is an influential member, but we believe a cut in December is unlikely," said Cooper Howard, director of fixed income research and strategy at the Schwab Center for Financial Research (SCFR).

This week features several Treasury auctions, including a 2-year today following lackluster demand earlier this month. Tomorrow brings the delayed September Producer Price Index (PPI) and retail sales reports. Checking technicals, Friday's close looked positive as the S&P 500 index finished above its 100-day simple moving average. That trendline, now at 6,548, forms key support. The price action is encouraging, and the potential support gives investors a line in the sand to trade against and the near-term assessment is moderately bullish."

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is slightly lower to 4.054%.

The U.S. Dollar Index ($DXY) is higher by 0.04 to 100.22.

WTI Crude Oil (/CL) is lower by 0.12% to $57.99/barrel.

Gold prices have traded in a range of $4,072.60-$4,125.80 and were last seen trading higher by ~0.19% to $4,124.00/oz.

Natural Gas prices have traded in a range of $4.444-4.576 today and were last seen trading lower by 2.07% to $4.485.

Bitcoin (BTC) is lower by ~0.56% to $86,307.95 today.

Shares of Merck & Co. (MRK + $3.95 to $101.71) are trading at a year-to-date high this morning after Wells Fargo upgraded the drug maker to “Overweight” from “Equal Weight” and raised their price target on the stock to $125.00 from $90.00. Analysts at Wells Fargo said that recent business developments and progress in the company’s drug pipeline will help reduce the revenue impact from the loss of Keytruda exclusivity. Calls are outnumbering puts ~4:1 with the November 28^th 105.00 call seeing the most action from traders (volume is 2,551).

Also trading to the upside this morning is Carvana Co. (CVNA + $18.87 to $328.76) after Wedbush upgraded the auto retailer to “Outperform” from “Neutral” and bumped their price target on the stock to $400.00 from $380.00. Analysts at Wedbush said the recent pullback in the stock provides investors with an attractive entry point. Calls are slightly outnumbering puts with the December 12^th 385.00 call leading the way (volume is 3,393).

New 52-week highs (72 new highs today): Alphabet Inc. (GOOGL + $17.50 to $317.15), Prologis Inc. (PLD + $0.63 to $126.42), Universal Health Services Inc. (UHS + $5.17 to $237.09)

Some unusual call activity (~17:1 calls over puts) is being seen in Teladoc Health Inc. (TDOC + $0.25 to $7.22) as option traders primarily target the November 28^th 7.50 call. Volume on this contract is 10,467 versus open interest of 979, 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 $0.07-0.13 each, which suggests bullish intent.

Shares of Argenx SE (ARGX - $13.20 to $905.72) are moving lower this morning after Wolfe Research downgraded the commercial-stage biopharma company to “Peer Perform” from “Outperform” without a price target on the stock. Wolfe Research analyst Andy Chen said the stock’s valuation is nearing a “ceiling” and the company’s potential catalysts are “poorer” going forward. Calls are outnumbering puts ~15:1 with the December 19^th 1040.00 call being the highest volume contract (volume is 99).

Also trading to the downside this morning is Home Depot Inc. (HD - $3.32 to $340.00) after the home improvement retailer received a couple of analyst price target (PT) cuts – Wolfe Research cut their PT from $497 to $423 and Daiwa Securities lowered their PT to $348 from $399. Calls are outnumbering puts better than 2:1 with the December 19^th 345.00 call garnering the most attention from traders (volume is 1,246).

New 52-week lows (73 new lows today): Blackbaud Inc. (BLKB - $0.73 to $55.76), Copart Inc. (CPRT + $0.58 to $99.01), Motorola Solutions Inc. (MSI - $0.49 to $368.50)

Some unusual put activity (~25:1 puts over calls) is being seen in Nextpower Inc. (NXT + $0.53 to $87.66) which is primarily driven by a 7,920 contract block that was sold on the January 2026 60.00 put for $0.80 when the bid/ask spread was $0.75 x $1.25 (open interest is 2,403). We know that this block is a new position based on the open interest figure, and we can assume that the block trader believes NXT will close above the $60.00 price level and/or is comfortable taking a long 792,000 share position in the stock at an effective purchase price of $59.20 if NXT closes below $60.00 at expiration.

JBS N.V. (JBS + $0.68 to $14.42): Option volume is running at ~54x the daily average on this food company as option traders primarily target the March 2026 15.00 call. Volume on this contract is 20,279 versus open interest of 2,500, 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 at the ask price of $0.65 each, which suggests bullish intent.

Agilent Technologies Inc. (A + $1.03 to $152.28): Option volume is running at ~21x the daily average on this life sciences tools and services provider which is primarily being driven by three large blocks that simultaneously traded on the December 19^th expiration earlier this morning:

• 165.00 call (open interest is 143): A 1,900 contract block was sold for $1.45 when the bid/ask spread was $1.35 x $1.75.
• 145.00 put (open interest is 563): A 1,900 contract block was bought at the ask price of $3.40.
• 135.00 put (open interest is 1,225): A 1,900 contract block was sold for $1.00 when the bid/ask spread was $0.95 x $1.25.

We know that all these blocks are new positions based on the respective open interest figures, and it appears a (bearish) risk reversal put spread was established for a net debit of $0.95 (x 1,900 contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that A will close below the break-even price of $144.05 at expiration.

Enterprise Products Partners L.P. (EPD + $0.17 to $32.62): Option volume is running at ~6x the daily average on this midstream energy services provider as option traders primarily target the November 28^th 33.00 call. Volume on this contract is 12,186 versus open interest of 198, 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 $0.03-0.07 each, which suggests bullish intent. 

The Cboe Volatility Index (VIX - 2.22 to 21.21) has been on both sides of the unchanged line today (intraday range is 20.93-23.68), as equity markets are higher around the midday mark (DJI + 282, SPX + 92, COMP + 528). VIX option volume is below average today at 282,438 contracts, and the activity has been slightly call-biased so far today.