Today's Options Market Update

Wall Street limps into Thursday at new lows for the year and slightly down early as crude jumped after the U.S. threatened Iran's energy infrastructure. This follows the Federal Reserve keeping rates paused and projecting only one 2026 cut in its "dot plot." Markets slipped in dismal trading yesterday after the decision, though much of the pressure seemed generated by events thousands of miles away—including attacks by Iran on a Gulf natural gas hub.

"Notably, seven Federal Open Market Committee (FOMC) members have dots suggesting no cuts this year, which suggests that the Fed can take a patient approach going forward," said Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research (SCFR), in his analysis of the Fed meeting. "Prior to the war, we thought inflation would be in the driver's seat for policy over the first half of the year, and that still seems to be the case now." The Fed also watches employment. Initial weekly jobless claims scratched the bottom of their recent range at 205,000, the government said this morning.

On Wednesday, major indexes fell 1%. A scorching U.S. February Producer Price Index (PPI) report spooked investors—and its readings were collected before the war sent crude prices sky-high. Investors awoke to fresh bearish war news today when Reuters reported that the Trump administration is sending thousands of troops to the Middle East. "This crisis is becoming less about the ultimate peak in oil prices and more about how long they remain elevated," said Liz Ann Sonders, chief investment strategist at SCFR, and Kevin Gordon, head of macro research and strategy at SCFR, in their latest look at the war’s impact.

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is higher by ~1 basis point to 4.275%.

The U.S. Dollar Index ($DXY) is lower by 0.39 to 99.70.

WTI Crude Oil (/CL) is higher by 1.07% to $97.35/barrel.

Gold prices have traded in a range of $4,505.00-4,868.70 and were last seen trading lower by ~5.78% to $4,613.00/oz.

Natural Gas prices for March futures have traded in a range of $3.14-3.27 today and were last seen trading higher by 4.27% to $3.196.

Bitcoin (BTC) is lower by ~2.41% over the last 24 hours to $69,540.78 today.

Shares of Five Below Inc. (FIVE + $21.12 to $232.59) are trading at a three-year high this morning after the discount retailer reported Q4 adjusted EPS of $4.31 ($0.33 beat) on Q4 sales of $1.28B (above the $1.70B expected). FIVE also issued upbeat guidance as Q1 adjusted EPS is expected to come in a range of $1.57-1.69 with Q1 revenue expected to come in a range of $1.18-1.20B, both above the respective $0.94 & $1.096B consensus estimates. Calls and puts are trading roughly even with the March 20^th 220.00 call being the highest volume contract (volume is 1,159).

Also trading to the upside this morning is Align Technology Inc. (ALGN + $6.55 to $178.96) following a Blomberg report that activist investor Elliott Investment Management has accumulated a significant stake in the maker of Invisalign teeth-straightening products. The activist firm is expected to work with ALGN executives regarding strategic measures aimed at boosting shareholder value. Puts are outnumbering calls ~4:1 with the March 20^th 165.00 put leading the way (volume is 501).

New 52-week highs (63 new highs today): Chevron Corp. (CVX + $2.74 to $201.35), EOG Resources Inc. (EOG + $1.99 to $139.51), Tower Semiconductor Inc. (TSEM + $12.04 to $154.00)

Some unusual call activity (~100:1 calls over puts) is being seen in Plains All American L.P. (CC + $0.29 to $21.87) which is primarily being driven by a 9,750 contract block that was bought on the November 20^th 23.00 call at the ask price of $0.75 (open interest is 238). We know that this block is a new position based on the open interest figure and we can assume the intent is bullish in nature since the trade took place at the ask price.

Shares of Micron Technology Inc. (MU - $22.44 to $439.23) are moving lower this morning even though the DRAM and NAND maker beat quarterly estimates and issued better-than-expected guidance last night after the bell. The company reported fiscal Q2 adjusted EPS of $12.20 ($2.99 beat) on Q2 revenue that increased 198% year-over-year (YoY) to $23.86B (well above the $19.97B FactSet consensus estimate). The company also issued robust guidance as Q3 EPS is expected to come in a range of $18.75-19.55 on Q3 revenue that is expected to come in a range of $32.75-34.25B versus the respective $11.70 & $23.804B consensus estimates. Calls are outnumbering puts ~3:2 with the March 20^th 450.00 call garnering the most attention from traders (volume is 31,009).

Also trading to the downside is Alibaba Group Holding Ltd. (BABA - $8.68 to $125.75) after the China-based e-commerce giant reported Q3 adjusted EPS of $1.01 ($0.72 miss) on Q3 revenue of $40.732B (below the $41.26B expected). BABA’s Q3 Cloud Intelligence Group revenue grew 36% YoY and the company said that its combined cloud and AI external revenue is expected to exceed $100B USD over the next five years. Calls are outnumbering puts better than 2:1 with the March 20^th 130.00 call seeing the most action from traders (volume is 7,421).

New 52-week lows (239 new lows today): Accenture PLC (ACN + $9.94 to $205.09), Baxter International Inc. (BAX - $0.45 to $16.64), Chemed Inc. (CHE - $3.92 to $379.29)

Some unusual put activity (~100:1 puts over calls) is being seen in West Pharmaceutical Services Inc. (WST + $1.59 to $240.59) which is primarily driven by a 3,300 contract block that was bought on the May 15^th 210.00 put for $7.80 when the bid/ask spread was $5.40 x $7.90 (open interest is 3). 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 above the midpoint of the bid/ask spread.

Phathom Pharmaceuticals Inc. (PHAT + $0.19 to $11.15): Option volume is running at over 600x the daily average on this biopharmaceutical company which is primarily being driven by a couple of large blocks that simultaneously traded on the January 2028 expiration earlier this morning:

• 7.50 call (open interest is 3,002): A 3,000 contract block was bought for $7.35 when the bid/ask spread was $5.10 x $9.50.
• 12.50 call (open interest is 3,000): A 3,000 contract block was sold for $5.65 when the bid/ask spread was $3.50 x $7.90.

It’s likely that these blocks are new positions based on the expiration date, and assuming they are, it appears that a $5.00-wide bull call spread was established for a net debit of $1.70 (x 3,000 contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that PHAT will close above the break-even price of $9.20 at expiration.

LKQ Corp. (LKQ - $0.66 to $27.97): Option volume is running at ~144x the daily average on this auto parts maker which is primarily being driven by a couple of large blocks that simultaneously traded on the May 15th expiration earlier this morning:

• 27.50 put (open interest is 149): A 5,000 contract block was bought at the ask price of $1.75.
• 22.50 put (open interest is 153): A 5,000 contract block traded for $0.43 when the bid/ask spread was $0.30 x $0.50.

We know that these blocks are new positions based on the respective open interest figures, and it appears (since the block trade on the 27.50 put took place at the ask price) that a $5.00-wide bear put spread was established for a net debit of $1.33 (x 5,000 contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that LKQ will close below the break-even price of $26.17 at expiration.

Alliance Resource Partners L.P. (ARLP + $1.47 to $28.85): Option volume is running at ~35x the daily average on this coal producer which is primarily being driven by a 3,600 contract block that was bought on the June 18^th 35.00 call at the ask price of $0.25 (open interest is 27). We know that this block is a new position based on the open interest figure and we can assume the intent is bearish in nature since the trade took place at the ask price.

The Cboe Volatility Index (VIX + 0.17 to 25.26) has been on both sides of the unchanged line today (the intraday range is 24.85-27.52), as equity markets are lower across the board around the midday mark (DJI - 383, SPX - 42, $COMP - 171). VIX option volume is above average today at 665,446 contracts, and calls are outnumbering puts better than 2:1.