Today's Options Market Update

Softer-than expected November U.S. consumer price growth gave Wall Street an early boost Thursday and may provide the Federal Reserve more runway for rate cuts. The November Consumer Price Index (CPI) rose 2.7% year over year—down from the previous year-over-year increase of 3%—and edged up 0.2% from September. Core CPI excluding food and energy rose 2.6% year over year and 0.2% from September. Analysts had expected 3% annual core and headline growth and 0.3% monthly growth, though there was no October data due to the shutdown.

"This report was a step in the right direction," said Collin Martin, head of fixed income research and strategy, Schwab Center for Financial Research (SCFR). "Although the report was incomplete given the government shutdown, the year-over-year changes in both headline and core CPI came in well below expectations. We'll want to see more complete data over the next few months to confirm this trend, but it should alleviate the concerns for some of the Fed officials who have been worried about inflation's stickiness. This doesn't change our view of a pause in rate cuts in January, but more data like this could pull forward the timing of the next cut."

The S&P 500 index finished down for the fourth straight session Wednesday and lost hold of the 50-day moving average near 6,765. That level could continue to be a measuring stick for the bulls. Tech hit the skids again Wednesday, with Oracle (ORCL) in a deep freeze, down 5% after Bloomberg reported that Blue Owl Capital, a partner in Oracle's AI infrastructure build-out, isn't contributing equity. This raised new concerns about debt funding for AI projects. Chip shares fell nearly 4% Wednesday, but robust earnings from Micron (MU) after the close powered its shares to double-digit gains overnight and injected missing vigor.

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is lower by ~3 basis points to 4.116%.

The U.S. Dollar Index ($DXY) is higher by 0.091 to 98.459.

WTI Crude Oil (/CL) is higher by 0.84% to $56.41/barrel.

Gold prices have traded in a range of $4,338.00-$4,375.70 and were last seen trading lower by ~0.36% to $4,358.10/oz.

Natural Gas prices have traded in a range of $4.05-4.218 today and were last seen trading higher by 2.66% to $4.131.

Bitcoin (BTC) is higher by ~2.72% to $88,521.50 today.

Shares of Micron Technology Inc. (MU + $29.83 to $255.20) are gapping up this morning after the DRAM and NAND maker reported Q1 adjusted earnings of $4.78 per share ($0.82 beat) on revenue that rose 56% year-over-year (YoY) to $13.64B (above the $12.91B expected). The company also issued upbeat guidance as Q2 adjusted EPS is expected to come in a range of $8.22-8.62 and Q2 revenue is expected to come in a range of $18.30-19.10B, which is well above the respective $4.78 & $14.33B consensus estimates. Calls are outnumbering puts ~4:3 with the December 19^th 260.00 call seeing the most action from traders (volume is 18,253).

Also trading to the upside this morning is GE Vernova Inc. (GEV + $30.50 to $644.69) after Jefferies upgraded the power infrastructure company to “Buy” from “Hold” and raised their price target on the stock to $815.00 from $736.00. Analysts at Jefferies cited a more positive outlook on the company, given gas pricing, services visibility and the outlook for electrification. Calls are outnumbering puts ~3:2, but the January 16^th 540.00 put is the highest volume contract (volume is 1,057).

New 52-week highs (81 new highs today): Ebit Systems Inc. (ESLT + $5.96 to $544.94), Lear Corp. (LEA + $1.46 to $118.00), Toyota Motor Corp. (TM + $2.69 to $216.93)

Some unusual call activity (~100:1 calls over puts) is being seen in building products maker Masco Corp. (MAS + $0.72 to $65.83) as option traders primarily target the January 16^th 70.00 call. Volume on this contract is 1,776 versus open interest of 574, so we know that the activity primarily represents fresh positioning. The majority of the transactions consisted of various-sized blocks that were bought at various times at the ask prices of $0.65 & $0.70 each, which suggests bullish intent.

Shares of FactSet Research Systems Inc. (FDS - $16.68 to $279.45) are moving lower this morning even though the financial data provider beat quarterly estimates earlier this morning. The company reported Q1 adjusted EPS of $4.51 ($0.14 beat) on revenue of $607.62M (above the $600.45M expected). FDS reaffirmed FY2026 adjusted EPS of $16.90-17.60 and FY2026 revenue of $2.423-2.448B versus the respective $17.38 & $2.442B consensus estimates. Puts are outnumbering calls ~2:1 with the December 19^th 270.00 put seeing the most action from traders (volume is 640).

Also trading to the downside this morning is The Allstate Corporation (ALL - $2.96 to $206.12) after William Blair downgraded the insurance provider to “Market Perform” from “Outperform”, citing deteriorating auto insurance sector fundamentals. Separately, Allstate reported catastrophe losses of $46M, or $36M after taxes, for the month of November. Option volume is relatively light with the December 19^th 200.00 put being the highest volume contract (volume is 27).

New 52-week lows (53 new lows today): Actuant Corp. (EPAC - $2.46 to $36.80), Hudon Pacific Properties Inc. (HPP - $0.33 to $10.68), Janux Therapeutics Inc. (JANX - $0.17 to $13.93)

Some unusual put activity (~100:1 puts over calls) is being seen in Solaris Energy Infrastructure Inc. (SEI + $3.20 to $43.84) which is primarily driven by a 11,000 contract block that was bought on the January 16^th 40.00 put for $2.71 when the bid/ask spread was $1.80 x $3.50 (open interest is 151). 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.

Enovis Corp. (ENOV + $0.25 to $27.61): Option volume is running at ~300x the daily average on this medical technology company as option traders primarily target the January 16^th 35.00 call. Volume on this contract is 2,390 versus open interest of 1,542, so we know we have some new positioning here. The majority of the transactions consisted of various-sized blocks that were bought at various times for between $0.25-0.35 each, which suggests bullish intent.

Goldman Sachs BDC Inc. (GSBD - $0.02 to $9.73): Option volume is running at ~150x the daily average on this business development company which is primarily being driven by a couple of large blocks that simultaneously traded on the June 2026 expiration earlier this morning:

• 10.00 call (open interest is 1,910): A 3,500 contract block was bought for $0.38 when the bid/ask spread was $0.35 x $0.40.
• 12.50 call (open interest is 1,464): A 3,500 contract block was sold for $0.02 when the bid/ask spread was $0.00 x $0.10.

We know that these blocks are new positions based on the respective open interest figures, and it appears that a $2.50-wide bull call spread was established for a net debit of $0.36 (x 3,500 contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that GSBD will close above the break-even price of $10.36 at expiration.

Advanced Auto Parts Inc. (AAP - $0.92 to $41.87): Option volume is running at ~13x the daily average on this auto parts retailer which is primarily being driven by a couple of large blocks that simultaneously traded on the January 23^rd expiration earlier this morning:

• 40.00 call (open interest is 2): A 5,000 contract block was bought for $4.10 when the bid/ask spread was $3.65 x $4.15.
• 50.00 call (open interest is 9): A 5,000 contract block was sold for $0.50 when the bid/ask spread was $0.36 x $0.90.

We know that 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 $3.60 (x 5K contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that AAP will close above the break-even price of $43.60 at expiration.

The Cboe Volatility Index (VIX - 1.64 to 15.98) has been on both sides of the unchanged line today (the intraday range is 15.93-17.68), as equity markets are higher around the midday mark (DJI + 444, SPX + 94, $COMP + 444). VIX option volume is above average today at 413,914 contracts, and the activity has been call-biased so far today.