Today's Options Market Update

After last Friday's dramatic tech-fueled rebound, investors return to critical data, most notably January nonfarm payrolls Wednesday. Last week's S&P 500 whipsaw from 2% losses to almost even sent volatility to new two-month peaks, and after-shocks can't be ruled out. Major indexes edged lower this morning, Treasury yields climbed, and bitcoin dropped back below $70,000.

On the one hand, it's encouraging to see fresh all-time highs in the Dow and S&P Equal Weight indices. On the other hand, was Friday's sharp bounce-back in higher risk areas of the market, like software and crypto, a legitimate signal of capitulation and seller exhaustion, or is it a short-term oversold bounce that will give in to more selling pressure. The S&P 500 Equal Weight Index (SPXEW) weighs all components equally rather than by market capitalization, smoothing mega-cap influence.

Someone back from vacation hearing the S&P 500 Index fell less than 1% last week might assume it was a dull stretch. Reality was very different, as anyone who strapped in for last week's nail-biting roller coaster ride remembers. Though Friday's 4% tech rally provided the heavy lifting on the comeback trail, market breadth remains solid with 67% of S&P 500 stocks at or above their 50-day moving averages, reinforcing below-surface strength. Last week's leading sectors were staples, industrials, energy, and materials—the same four that lead this year and have the S&P 500 Index near all-time highs despite tech's 3% decline.

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is higher by ~1 basis point to 4.22%.

The U.S. Dollar Index ($DXY) is lower by 0.72 to 96.91.

WTI Crude Oil (/CL) is higher by 0.93% to $64.14/barrel.

Gold prices have traded in a range of $4,988.60-5,069.00 and were last seen trading higher by ~1.52% to $5,055.70/oz.

Natural Gas prices for March futures have traded in a range of $3.111-3.265 today and were last seen trading lower by 7.07% to $3.18.

Bitcoin (BTC) is lower by ~1.44% over the last 24 hours to $69,291.59 today.

Shares of Apollo Global Management Inc. (APO + $6.22 to $139.25) are moving higher this morning after the private equity firm reported Q4 adjusted earnings of $2.47 per share ($0.32 beat) on Q4 revenue that increased 86% year-over-year (YoY) to $9.864B (above the $5.372B expected). Apollo’s Q4 fee-related revenue increased 30% YoY with Q4 deal origination activity coming in at a record $97B. Calls are outnumbering puts ~2:1 with the February 20^th 143.00 call seeing the most action from traders (volume is 1,359).

Also trading to the upside this morning is Oracle Corp. (ORCL + $12.93 to $155.75) after D.A. Davidson upgraded the cloud and software provider to “Buy” from “Neutral” while maintain their $180.00 price target on the stock. D.A. Davidson analyst Gil Luria said that the market “overshot to the downside” over concerns around exposure to OpenAI. Luria believes concerns around OpenAI are easing as the company secures more funding which will support the funding of the data centers Oracle is building. Calls are outnumbering puts ~2:1 with the February 13^th 170.00 call leading the way (volume is 14,105).

New 52-week highs (186 new highs today): Caterpillar Inc. (CAT + $9.95 to $736.16), GE Vernova Inc. (GEV + $25.45 to $804.80), Lumentum Holdings Inc. (LITE + $42.72 to $594.71)

Some unusual call activity (~100:1 calls over puts) is being seen in Ingersoll Rand Inc. (IR + $0.47 to $98.97) as option traders primarily target the February 20^th 100.00 call. Volume on this contract is 1,579 versus open interest of 13, so it’s likely that nearly all the volume represents new positioning. The majority of the transactions consisted of various-sized blocks that were bought around the same time at the ask price of $2.60 each, which suggests bullish intent.

Shares of Waters Corp. (WAT - $49.18 to $332.11) are gapping down below the 200-day Simple Moving Average (SMA) this morning, after the provider of analytical workflow solutions beat quarterly estimates but issued mixed guidance earlier this morning. The company reported Q4 adjusted EPS of $4.53 ($0.02 beat) on Q4 revenue of $932.362M (above the $928.096M consensus estimate). Looking ahead, the company guided Q1 adjusted EPS to a range of $2.25-2.35 (below the $2.51 consensus estimate) with Q1 revenue expected to come in a range of $1.198-1.211B (above the $732.808M expected). Puts are outnumbering calls ~5:1 with the February 20^th 300.00 put being the highest volume contract (volume is 197).

Also trading to the downside today is Monday.com Ltd. (MNDY - $20.19 to $77.81) after the work-management software company reported strong quarterly results but provided soft guidance earlier this morning. The company reported Q4 adjusted earnings of $1.04 per share (above the $0.92 FactSet consensus estimate) on Q4 revenue that increased 25% YoY to $333.88M (above the $329.64M expected). Regarding guidance, the company said that Q1 revenue is expected to come in a range of $338-340M (below the $342.97M consensus estimate) with Q1 adjusted operating margin outlook expected to be 11-12%. Calls and puts are trading roughly even with the February 20^th 100.00 call seeing the most action from traders (volume is 2,064).

New 52-week lows (96 new lows today): Adobe Systems Inc. (ADBE - $2.15 to $266.23), Hims & Hers Health Inc. (HIMS - $6.20 to $16.82), Morningstar Inc. (MORN - $2.82 to $162.65)

Some unusual put activity (~30:1 puts over calls) is being seen in Revolution Medicines Inc. (RVMD - $0.25 to $97.24) which is primarily being driven by a couple of large blocks that simultaneously traded on the June 18^th expiration earlier this morning:

• 80.00 put (open interest is 168): A 6,720 contract block was bought for $7.35 when the bid/ask spread was $5.80 x $7.80.
• 50.00 put (open interest is 300): A 6,720 contract block was sold for $0.70 when the bid/ask spread was $0.35 x $3.10.

We know that these blocks are new positions based on the respective open interest figures, and it appears that a $30.00-wide bear put spread was established for a net debit of $6.65 (x 6,720 contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that RVMD will close below the break-even price of $73.35 at expiration.

Barclays PLC (BCS + $0.25 to $26.67): Option volume is running at ~19x the daily average on this banking giant as option traders primarily target the June 18^th 22.00 put. Volume on this contract is 4,085 versus open interest of 62, so we know that the volume primarily represents new positioning. The majority of the transactions consisted of various-sized blocks that were bought at various times for between $0.80-0.85 each, which suggests bearish intent.

Rumble Inc. (RUM + $0.49 to $6.27): Option volume is running at ~11x the daily average on this video sharing platform as option traders primarily target the February 20^th 7.00 call. Volume on this contract is 7,841 versus open interest of 1,178, so we know that the volume primarily represents fresh positioning. The majority of the transactions consisted of various-sized blocks that were bought at around the same time at the ask price of $0.10 each (including a 2,170 contract block that was bought at the ask price of $0.10), which suggests bullish intent.

JFrog Ltd. (FROG + $2.96 to $50.95): Option volume is running at ~6x the daily average on this provider of supply chain software as option traders primarily target the March 20^th 60.00 call. Volume on this contract is 6,049 versus open interest of 378, so we know that the volume primarily represents new positioning. The majority of the transactions consisted of various-sized blocks that were bought at various times for between $2.45-2.60 each, which suggests bullish intent.

The Cboe Volatility Index (VIX - 0.68 to 17.08) has been on both sides of the unchanged line today (the intraday range is 17.04-19.20), as equity markets are mostly higher around the midday mark (DJI - 6, SPX + 44, $COMP + 270). VIX option volume is above average today at 510,267 contracts, and calls are outnumbering puts roughly 4:3 so far today.