Today's Options Market Update

Wall Street is back in sell-off mode this morning as Treasury yields soared following uncomfortably hot inflation data and disappointing earnings from Meta Platforms (META). Shares of that mega cap fell 13% ahead of the open.

The market was already lower on Meta before losing more ground after the government's first estimate for Q1 gross domestic product (GDP) hit the tape. While GDP growth of 1.6% was below expectations, investors appeared to fixate on the inflation component of the report. The Q1 chain deflator—which measures the final cost of all goods and services produced domestically—rose 3.1%. That was above the 2.9% Briefing.com consensus and Q4's 1.6%.

"Markets are looking for evidence that the disinflationary trend is resuming, but this report didn't deliver that message," said Collin Martin, director, fixed income strategy, at Schwab.

Today's GDP price data comes a day ahead of March Personal Consumption Expenditure (PCE) prices, due tomorrow morning. Wall Street expects monthly PCE growth of 0.3%. So far, all of this year's inflation data has been hotter than expected, pushing back rate cut hopes. The Federal Reserve isn't expected to adjust rates at its meeting concluding next Wednesday, but tomorrow's PCE report could affect policy makers' thinking on rate cut timing.

This morning's Meta Platforms-related weakness on Wall Street is an uncomfortable reminder of how much influence these huge stocks can have. Meta fell mostly due to lower-than-expected revenue guidance, but rising costs also played a role.

The 10-year Treasury note yield ($TNX) is up ~6 basis points to a year-to-date high of 4.712%.

The U.S. Dollar Index ($DXY) is lower by 0.10% to 105.75.

The Cboe Volatility Index® ($VIX) has been in positive territory all day today and was last seen higher by 0.39 at 16.36.

WTI Crude Oil (/CL) is down roughly 0.75% to $82.18 per barrel.

Gold prices have traded in a range of $2,316.40 to $2,357.60 and were last seen trading higher by 0.59% $2,352.20/oz.

Natural Gas prices have traded in a range of $1.601-1.675 so far today and were last seen trading lower by 1.75% to $1.624/MMBtu.

Bitcoin (/BTC) is currently down roughly 1.60% to 63,230.20 today.

Source: Schwab Center for Financial Research

Shares of Chipotle Mexican Grill Inc. (CMG + $131.60 to $3,058.63) are trading at all-time highs this morning after the burrito chain reported Q1 earnings of $13.37 per share, excluding non-recurring items ($1.68 beat) on revenue that rose 12.6% year-over-year to $2.7B (above the $2.68B FactSet consensus estimate) as comparable restaurant sales increased 7.0% year-over-year. Looking ahead, the company said that full-year 2024 (FY24) comparable restaurant sales growth is expected to be in the mid to high-single digits and the company expects to open 285-315 new restaurants in FY24. Puts are slightly outnumbering calls, but the April 26^th 3100.00 call is the highest volume contract (volume is 512).

Also trading to the upside this morning is United Rentals Inc. (URI + $33.49 to $688.68) after the equipment rental company reported Q1 earnings of $9.15 per share, excluding non-recurring items ($0.78 beat) on revenue that rose 6.1% year-over-year to $3.48B (above the $3.44B FactSet consensus estimate). The company also raised guidance as FY24 revenue is now expected to come in a range of $14.95-15.45B (from $14.65-15.15B) with FY24 adjusted EBITDA now expected to come in a range of $7.04-7.29B (from $6.90-7.15B). Calls are outnumbering puts ~4:3 with the April 26^th 710.00 call being the highest volume contract (volume is 711).

New 52-week highs (34 new highs today): Interactive Brokers Inc. (IBKR + $0.97 to $116.61), Kirby Corp. (KEX + $8.14 to $109.19), Strayer Education Inc. (STRA + $12.55 to $113.20)

Some unusual call activity (~100:1 calls over puts) is being seen in Healthcare Realty Trust Inc. (HR - $0.36 to $14.02) which is primarily being driven by activity on the November 15^th 15.00 call. Volume on this contract is 1,254 versus open interest of 372, so we know that the activity primarily represents fresh positioning. The bulk of the transactions on this contract consisted of various-sized blocks that were being bought at various times at the ask price of $0.75 each, which suggests bullish intent.

Shares of Meta Platforms Inc. (META - $55.39 to $438.11) are under pressure after the social media giant beat quarterly estimates but provided lackluster guidance and raised the company's FY24 expense guidance. META reported Q1 earnings of $4.71 per share, excluding non-recurring items ($0.39 beat) on revenue that rose 27.3% year-over-year to $36.45B (above the $36.14B FactSet consensus estimate). Regarding guidance, the company said that Q2 revenue is expected to come in a range of $36.5-39.0B (vs. the $38.25B FactSet consensus estimate) and upped their FY24 capital expenditure guidance to a range of $96-99B (from $94-99B). Calls are outnumbering puts ~3:2 with the April 26^th 450.00 call being the highest volume contract (volume is 59,914).

Also trading to the downside this morning is Service Now Inc. (NOW - $41.86 to $704.42) after the provider of end-to-end intelligent workflow automation platform solutions beat quarterly estimates but provided soft subscription guidance last night after the bell. The company reported Q1 earnings of $3.41 per share, excluding non-recurring items ($0.27 beat) on revenue that rose 24.2% year-over-year to $2.60B (slightly above the $2.59B FactSet consensus estimate. Looking ahead, the company said that Q2 subscription revenue is expected to come in a range of $2.525-2.53B which is below analyst expectations for $2.54B, per LSEG data. Calls are slightly outnumbering puts with the May 17^th 660.00 call leading the way (volume is 3,010).

New 52-week lows (159 new lows today): Alnylam Pharmaceuticals Inc. (ALNY - $1.26 to $142.54), Boeing Company (BA - $3.87 to $160.46), Gilead Sciences Inc. (GILD - $1.52 to $65.56)

Some unusual put activity (~57:1 puts over calls) is being seen in SLM Corp. (SLM - $0.32 to $21.77) which is primarily being driven by activity on the July 19^th 20.00 put. Volume on this contract is 2,582 versus open interest of 107, so we know that the activity primarily represents fresh positioning. The bulk of the transactions on this contract consisted of various-sized blocks that were being bought at various times at the ask price of $0.50 each, which suggests bearish intent.

MiMedx Group Inc. (MDXG - $0.29 to $6.14): Option volume is running at ~44x the daily average on this provider of placental tissue allografts to the healthcare industry which is primarily being driven by activity on the May 17^th 7.50 put. Volume on this contract is 3,595 versus open interest of 20, so it's likely that nearly all of the volume represents fresh positioning. The bulk of the transactions on this contract consisted of various mid-sized blocks that were being sold at various times at the bid price of $1.90 each. The positioning suggests that the put seller(s) believe that MDXG will close above the break-even price of $5.60 and/or are comfortable taking a long position in the stock in the event that MDXG closes below $7.50 at expiration.

PCT Therapeutics Inc. (PTCT + $0.12 to $25.33): Option volume is running at ~22x the daily average on this biopharmaceutical company which is primarily being driven by a 1,529 contract block that was sold on the June 21^st 25.00 put for $2.00 when the bid/ask spread was $1.75 x $3.50 (open interest is 310). We know that this block is a new position based on the open interest figure and we can assume that the block trader believes that PTCT will close above the break-even price of $23.00 and/or are comfortable taking a long 152,900 share position in the stock at an effective purchase price of $23.00 in the event that PTCT closes below $25.00 at expiration.

Skechers USA Inc. (SKX - $0.19 to $58.96): Option volume is running at ~9x the daily average on this footwear retailer which is primarily being driven by activity on the August 16^th 55.00 put. Volume on this contract is 4,676 versus open interest of 48, so it's likely that nearly all of the volume represents fresh positioning. The bulk of the transactions on this contract consisted of various mid-sized blocks that were being sold at various times at the bid price of $2.65 each. The positioning suggests that the put seller(s) believe that SKX will close above the break-even price of $52.35 and/or are comfortable taking a long position in the stock in the event that SKX closes below $55.00 at expiration.

The Cboe Volatility Index (VIX + 0.39 to 16.36) has been in positive territory all day today (the intraday is 16.03-16.76) as equity markets are higher across the board around the mid-day mark (DJI - 464, SPX - 39, COMPX - 169). VIX option volume has been above average today at 486,436 contracts which puts the index at the #8 spot on the “Top Volume by Underlying” list. The volume put/call ratio is currently 0.36 with the highest volume contract being the May 22^nd 36.00 call (volume is 71,119 vs. open interest of 146,308).