Today's Options Market Update

Plenty of intrigue remains before the holidays. The Federal Reserve's rate decision Wednesday afternoon, AI-related earnings, and next week's November jobs report all could set the tone heading into 2026. Historically, major indexes often tread water before a Fed meeting, and the same could be true the next few days. Odds of a rate cut neared 90% early today, according to the CME FedWatch Tool, and major indexes ticked higher on support from tech.

Though the Fed is expected to slice rates for the third-straight meeting to a three-year low, Treasury yields rallied fiercely last week. A Japanese yield spike helped jumpstart the move, a possible headwind for stocks, and the benchmark 10-year Treasury note yield stayed near the top of its short-term range early Monday. A Fed rate cut, ironically, might push yields higher. "If the Fed is seen cutting interest rates when the inflation issue is still prevalent simply because the administration advocates that, then what probably will happen is long-term rates will go up as short-term rates go down," said Kathy Jones, chief fixed income strategist, Schwab Center for Financial Research (SCFR). "That's called a steeper yield curve. And that is counter to what the administration really wants to accomplish."

Higher yields can slow the economy, though equities participants didn't seem overly concerned last week. On Friday, major indexes rose for a fourth straight session and the S&P 500 index approached all-time highs after September Personal Consumption Expenditures (PCE) prices turned out mostly as expected. Core annual PCE—which excludes food and energy—was 2.8%, below consensus of 2.9% but above the Fed's 2% goal. This week's key data is tomorrow's 10 a.m. ET September Job Openings and Labor Turnover (JOLTS) report, though it's dated. Consensus is 7.2 million, a relatively high number historically that would be little changed from August.

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is higher by 5 basis points to 4.19%.

The U.S. Dollar Index ($DXY) is higher by 0.181 to 99.17.

WTI Crude Oil (/CL) is lower by 1.20% to $59.36/barrel.

Gold prices have traded in a range of $4,204.00-$4,247.90 and were last seen trading lower by ~0.56% to $4,219.20/oz.

Natural Gas prices have traded in a range of $4.946-5.205 today and were last seen trading lower by 6.33% to $4.954.

Bitcoin (BTC) is lower by ~0.56% to $89,917.50 today.

Gapping up to all-time highs this morning is Carvana Inc. (CVNA + $32.22 to $432.02) after it was announced late Friday that the used car retailer will be added to the S&P 500 index, along with construction materials maker CRH and construction engineering firm Comfort Systems USA. The changes are scheduled to take effect prior to the open of trading on Monday, December 22^nd. Calls are outnumbering puts ~3:2 with the December 12th 450.00 call seeing the most action from traders (volume is 3,916).

Also trading to the upside this morning is Generac Holdings Inc. (GNRC + $4.07 to $166.40) after JPMorgan upgraded the power generation maker to "Overweight" from "Neutral," citing potential for earnings growth related to AI and the subsequent buildout of data centers. Despite concerns of reduced pricing power due to Caterpillar's involvement in the space, analysts at JPMorgan believe Generac can still benefit from the secular growth story. Calls are outnumbering puts ~2:1 with the January 16^th 200.00 call being the highest volume contract (volume is 78).

New 52-week highs (141 new highs today): Broadcom Ltd. (AVGO + $9.83 to $400.07), Citigroup Inc. (C + $0.22 to $109.10), MongoDB Inc. (MDB + $7.25 to $416.87)

Some unusual call activity (~6:1 calls over puts) is being seen in lidar sensor maker Ouster Inc. (OUST + $1.00 to $25.78) as option traders primarily target the December 19^th 31.00 call. Volume on this contract is 3,463 versus open interest of 27, 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 at various times for between $0.50-0.70 each (including a 1,420-contract block that was bought for $0.65 when the bid/ask spread was $0.30 x $0.75), which suggests bullish intent.

Shares of Netflix Inc. (NFLX - $4.40 to $95.84) are moving lower this morning after the streaming giant received a couple of analyst downgrades–Rosenblatt lowered their rating to "Neutral" from "Buy" and lowered their price target to $105.00 from $152.00 while Pivotal Research downgraded NFLX to "Hold" from "Buy" and cut their price target on the stock to $105.00 from $160.00. Both firms cited the company's recently announced acquisition of Warner Bros. Discovery (WBD +$1.55 to $27.63) as the reason behind the downgrades. Earlier this morning Paramount Skydance announced a $30.00/share all-cash offer for WBD, stating that the counteroffer is superior to Netflix's $27.50 cash and stock deal and more likely to be cleared by regulators. Calls are outnumbering puts ~3:2 with the December 12^th 100.00 call being the highest volume contract (volume is 19,912).

Also trading to the downside this morning is Tesla Inc. (TSLA - $12.15 to $442.86) after Morgan Stanley downgraded the EV-maker to "Equal Weight" from "Overweight" while bumping their price target on the stock to $425.00 from $410.00. Analysts at Morgan Stanley noted the company's leadership potential in autonomous mobility, renewable energy and robotics, but said that the stock's valuation is rich, trading at 30 times their estimated 2030 EBITDA, with potential downside to consensus estimates in the near-term. Calls and puts are trading roughly even with the December 12^th 450.00 call garnering the most attention from traders (volume is 28,613).

New 52-week lows (48 new lows today): Arthur J. Gallagher & Company (AJG - $2.41 to $237.30), General Mills Inc. (GIS - $0.40 to $45.53), Linde PLC (LIN - $4.90 to $394.17)

Some unusual put activity (~4:1 puts over calls) is being seen in Voyager Technologies Inc. (VOYG - $0.37 to $23.38) which is primarily driven by a 2,000-contract block that was bought on the December 19^th 20.00 put at the ask price of $0.50 (open interest is 140). We know that this block is a new position based on the open interest figure, and we can assume that the intent is bearish in nature since the trade took place at the ask price.

Viasat Inc. (VSAT + $1.58 to $36.54): Option volume is running at ~16x the daily average on this provider of broadband and communications products and services which is primarily driven by two large block trades on the February 20^th 2026 42.00 call–a 3,600-contract block and a 4000-contract block were bought at the same time for $3.75 when the bid/ask spread was $3.30 x $3.90 (open interest is 83). We know that these blocks are new positions based on the open interest figure, and we can assume that the intent is bullish in nature since both trades took place above the midpoint of the bid/ask spread.

COMPASS Pathways PLC (CMPS + $0.37 to $6.19): Option volume is running at ~11x the daily average on this biotech company as option traders primarily target the January 21^st 2028 12.00 call. Volume on this contract is 3,323 versus open interest of 1,963, so we know that we have some new positioning here. The majority of the transactions consisted of various-sized blocks that were bought around the same time at the ask price of $2.45 each, which suggests bullish intent.

Delta Air Lines Inc. (DAL - $0.35 to $66.75): Option volume is running at ~9x the daily average on this airliner which is primarily being driven by a couple of large blocks that simultaneously traded on the January 16^th expiration earlier this morning:

• 70.00 call (open interest is 8,208): A 21,190-contract block was bought at the ask price of $2.31.
• 80.00 call (open interest is 3,279): A 21,190-contract block was sold at the bid price of $0.39.

We know that both these blocks are new positions based on the respective open interest figures and it appears that a $10.00-wide bull call spread was established for a net debit of $1.92 (x 21,190 contract x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that DAL will close above the break-even price of $71.92 at expiration.

The Cboe Volatility Index (VIX + 1.56 to 16.97) has been in positive territory all day today (the intraday range is 16.10-17.00), as equity markets are lower around the midday mark (DJI - 238 SPX - 29, COMP - 66). VIX option volume is above average today at 451,702 contracts, and the activity has been modestly call-biased so far today.