Today's Options Market Update

After a display of resilience Monday, stocks tumbled early today as fighting spread across the Middle East and crude oil spiked again. Iran threatened to block the Strait of Hormuz, where 20% of global oil flows out of the Persian Gulf, raising concerns that a surge in energy prices could lift U.S. inflation and delay rate cuts. Treasury yields, which initially slid when the conflict began edged up this morning and pain afflicted nearly every market sector. Market volatility flared.

Though Middle East fighting is the main focus, days ahead are packed with jobs data, building up to Friday's February nonfarm payrolls report. Those numbers will likely come under intense scrutiny after the economy added less than 200,000 jobs all last year before a revival to January's 130,000 growth. Jobs growth can be key to consumer spending, and solid gains for shares of Target (TGT) and Best Buy (BBY) following their earnings early today turned attention back toward that key metric. The consumer firms are followed later today by cybersecurity firm CrowdStrike (CRWD), putting focus back on the battered software sector, while chip giant Broadcom (AVGO) opens its books tomorrow.

On Monday, most major indexes finished flat to higher despite war headlines and rising oil prices. This might reflect investors understanding that historically, these geopolitical events often lead to a quick pullback in stocks that doesn't necessarily last, though past isn't precedent. The S&P 500 Index remained huddled in its near-term range, and only four of 11 sectors gained as consumer shares generally buckled under the weight of inflation worries triggered by eight-month crude highs. At the same time, shares of weakened tech and financial stocks appeared to find some dip buying. Volatility resumed early today, with the Cboe Volatility Index (VIX) climbing more than 20% to three-month highs above 25, historically another level that suggests more dramatic choppiness.

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is higher by ~2 basis points to 4.069%.

The U.S. Dollar Index ($DXY) is higher by 0.86 to 99.24.

WTI Crude Oil (/CL) is higher by 7.82% to $76.80/barrel.

Gold prices have traded in a range of $5,005.00-5,394.20 and were last seen trading lower by ~3.74% to $5,112.90/oz.

Natural Gas prices for March futures have traded in a range of $2.973-3.188 today and were last seen trading higher by 5.84% to $3.133.

Bitcoin (BTC) is higher by ~4.45% over the last 24 hours to $68,681.56 today.

Shares of Target Corp. (TGT + $4.13 to $117.30) are moving higher this morning after the retail giant reported Q4 adjusted EPS of $2.44 ($0.29 beat) on Q4 revenue of $30.45B (roughly in-line with the $30.46B expected) as Q4 comparable sales decreased 2.5% year-over-year. Looking ahead, the company guided full-year 2026 (FY26) EPS to a range of $7.50-8.50 (midpoint of guidance is better than the $7.63 FactSet consensus estimate) and FY26 revenue is expected to be $106.876B, slightly above the $106.672B consensus estimate. Calls are outnumbering puts ~4:3 with the March 6^th 120.00 call being the highest volume contract (volume is 5,165).

Also trading to the upside this morning is Best Buy Co. (BBY + $2.86 to $64.45) even though the electronics retailer reported mixed quarterly results and tepid guidance earlier this morning. BBY reported Q4 adjusted EPS of $2.61 ($0.14 beat) on Q4 revenue of $13.814B (below the $13.877B expected). The company guided FY27 EPS to a range of $6.30-6.60 and FY27 revenue to a range of $41.20-42.10B which were both below the respective $6.66 & $42.256B consensus estimates. Calls and puts are trading roughly even with the March 6^th 65.00 call being the highest volume contract (volume is 1,228).

New 52-week highs (47 new highs today): Cheniere Energy Ltd. (LNG + $4.74 to $253.67), Tidewater Inc. (TDW + $5.43 to $85.30), Valero Energy Corp. (VLO + $2.95 to $217.86)

Some unusual call activity (~5:1 calls over puts) is being seen in United Airlines Holdings Inc. (UAL - $2.20 to $101.01) as option traders primarily target the March 13^th 111.00 call. Volume on this contract is 30,355 versus open interest of 12, so it’s likely that nearly all the volume represents fresh positioning. The activity included a 5,000 that was bought at the ask price of $1.11 and (at a different time) a 5,000 contract block that was bought for $1.15 when the bid/ask spread was $1.08 x $1.20. We know that these blocks are new positions based on the open interest figure and we can assume the intent is bullish in nature given where the trades took place within their respective bid/ask spreads.

Shares of MongoDB Inc. (MDB - $70.25 to $254.76) are under pressure this morning after the general database platform beat quarterly estimates but issued mixed guidance last night after the market close. MDB reported Q4 adjusted EPS of $1.65 ($0.20 beat) on Q4 revenue of $695.072MB (above the $667.15M expected). Regarding guidance, the company said that Q1 adjusted EPS is expected to come in a range of $1.15-1.19 (below the $1.21 expected) with Q1 revenue expected to come in a range of $659-664M (vs. the $661.939M expected). For FY27, the company said that adjusted EPS is expected to come in a range of $5.75-5.93 (above the $5.63 expected) and FY27 sales to come in a range of $2.86-2.90B (vs. the $2.888B consensus estimate). Calls are outnumbering puts ~3:2 with the March 6^th 300.00 call seeing the most action from traders (volume is 2,294).

Also trading to the downside today is Credo Technology Group Holding Ltd.  (CRDO - $19.91 to $94.31) even though the provider of high-speed connectivity solutions for optical and electrical Ethernet and PCIe applications delivered a “beat and raise” quarter last night after the bell. CRDO reported Q3 adjusted EPS of $1.07 ($0.12 beat) on Q3 revenue that increased more than 200% year-over-year to $407.01M (above the $400.23M consensus estimate). Looking ahead, the company guided Q4 revenue to a range of $425-435M, which is above the $422.613M consensus estimate. Puts are outnumbering calls ~3:2 with the April 17^th 60.00 put being the only contract with any volume (volume is 15,049).

New 52-week lows (180 new lows today): Blackstone Inc. (BX - $6.63 to $108.70), Diageo PLC (DEO - $3.20 to $83.23), Novo Nordisk A/S (NVO - $2.57 to $36.19)

Some unusual put activity (~9:1 puts over calls) is being seen in Blue Owl Capital Inc. (OWL - $0.46 to $10.22) which is primarily being driven by a couple of large blocks that were sold at the same time on the June 18^th 11.00 put earlier this morning – a 30,200 contract block was sold for $2.01 and a 14,900 contract block was sold for $2.02 when the bid/ask spread was $1.95 x $2.15 (open interest is 1,296). We know that these blocks are new positions based on the open interest figure and we can assume that the block trader(s) believes that OWL will close above the $11.00 price level and/or is comfortable taking a long position in the stock if OWL closes below $11.00 at expiration.

Lloyds Banking Group PLC (LYG - $0.20 to $5.27): Option volume is running at ~119x the daily average on this UK bank as option traders primarily target the October 16^th 6.00 call. Volume on this contract is 10,641 versus open interest of 164, so we know that the volume primarily represents fresh positioning. The bulk of the transactions consisted of various-sized blocks that were bought at various times at the ask price of $0.30 each (including a 1,900 & 1,800 contract block that were bought at the ask price of $0.30), which suggests bullish intent.

First Horizon Corp. (FHN - $0.56 to $23.60): Option volume is running at ~16x the daily average on this provider of financial services which is primarily being driven by a couple of large blocks that simultaneously traded on the May 15^th expiration earlier this morning:

• 26.00 call (open interest is 21,835): A 30,000 contract block was bought for $0.56 when the bid/ask spread was $0.45 x $0.65.
• 30.00 call (open interest is 223): A 30,000 contract block was sold for $0.08 when the bid/ask spread was $0.05 x $0.20.

We know that these blocks are new positions based on the respective open interest figures, and it appears that a $4.00-wide bull call spread was established for a net debit of $0.48 (x 30,000 contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that FHN will close above the break-even price of $26.48 at expiration.

BankUnited Inc. (BKU - $0.46 to $46.77): Option volume is running at ~11x the daily average on this provider of financial services which is primarily being driven by a couple of large blocks that simultaneously traded on the August 21^st expiration earlier this morning:

• 55.00 call (open interest is 14,004): A 7,500 contract block traded for $2.45 when the bid/ask spread was $1.00 x $4.90.
• 70.00 call (open interest is 0): A 7,500 contract block traded for $1.00 when the bid/ask spread was $0.00 x $4.80.

Assuming both these blocks are new positions, it appears (since the block trade on the 70.00 call took place further below the midpoint of the bid/ask spread) that a $15.00-wide bull call spread was established for a net debit of $1.45 (x 7,500 contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that BKU will close above the break-even price of $56.45 at expiration.

The Cboe Volatility Index (VIX + 2.77 to 24.21) has been in positive territory all day today (the intraday range is 23.91-28.15), as equity markets are lower across the board around the midday mark (DJI - 633, SPX - 89, $COMP - 318). VIX option volume is above average today at 579,186 contracts, and calls are outnumbering puts better than 2:1 so far today.