Today's Options Market Update

Housing and sentiment data arrive today after Netflix (NFLX) earnings and guidance topped expectations late Thursday but failed to impress investors. Stocks edged higher out of the gate, building on yesterday's record close, and are on pace for weekly gains. "Markets have a risk-on tone," said Kathy Jones, chief fixed income strategist at Schwab.

Consumer sentiment—due at 10 a.m. ET—has been on the recovery path but remained historically low at 60.7 last month. Analysts expect a slight climb in July to 61.5. As always, the inflation aspect is key. Year-ahead inflation expectations fell to 5% in June from 6.6% in May. Retail sales rebounded in June, suggesting consumers are on the mend, but sentiment is another piece of the puzzle. So are housing starts and building permits, which were slightly better than expected for June.

Stocks rallied broadly yesterday to new highs for the S&P 500 index and Nasdaq Composite. It was the second straight day of upside earnings surprises, and more companies than usual are exceeding expectations. That said, the bar for success was low, with analysts not expecting huge gains. Improved June retail sales and jobless claims added to bullish sentiment. A relatively calm bond market has also been supportive for equities, said Liz Ann Sonders, chief investment strategist at Schwab. It's "crucial" to look under the surface of inflation data to see the impact of tariffs, "which are becoming noticeable, especially for imported goods," Sonders added.

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is down two basis points to 4.44%.

The U.S. Dollar Index ($DXY) is down slightly to 98.27.

The CBOE Volatility Index^® (VIX) is basically unchanged at 16.44.

WTI Crude Oil (/CL) is up 1.19% to $67.03/barrel.

Bitcoin (BTC) is lower by 0.92%, trading at $18,195.

Ethereum (ETH) is higher by 4.89% today to $3,590.

Shares of Talen Energy Corp. (TLN + $56.78 to $320.78) are up over 21% in morning trading, the biggest intraday move in its history after the company announced a $3.8 billion deal to buy two gas-fired power plants from Caithness Energy and BlackRock. The plants, Moxie Freedom Energy Center and Guernsey Power Station, are combined-cycle gas-fired plants with a combined capacity of nearly three gigawatts, per Bloomberg. This move is in response to the tech industry's continued aggressive buildout of data centers which is driving the need for expanded electricity demands.

Talen's CEO, Mac McFarland called the acquisition of the plant, "the closest thing to adding another nuclear plant to our portfolio" and described Talen's strategy as a flywheel, signing long-term supply contracts and acquiring new generation.

Analysts are also positive on the deal, as Evercore called it, "immediately accretive to free cash flow in FY26," and took its price target to $372. Barclays also raised its price target to $359, citing, "the deal is also accretive to the multiple, EBITDA and FCF outlook."

Option trading in TLN currently stands at 15,536 contracts, 30x the daily average, with call outpacing puts 5:1. Leading the way are the following trades, expirations, and strikes:

• July 18th, 2025, 300.00 call accounted for 1,178 contracts; open interest is 1,755 contracts.
• August 15th, 2025, 260.00 put accounted for 1,007 contracts; open interest is 149 contracts.
• November 21st, 2025, 350.00 call accounted for 1,005 contracts; open interest is 148 contracts.

New 52-week highs (200 new highs today): Robinhood Markets Inc. (HOOD + $5.77 to $111.22), QuantumScape Corp. (QS + $0.40 to $14.00), BTCS Inc. (BTCS + $1.19 to $7.66), Coinbase Global Inc. (COIN + $17.82 to $428.57)

Unusual call activity is noted today in Invesco Ltd. (IVZ + $1.95 to $19.23), as call volume currently stands at 24,840 contracts, 370x the average daily volume. Nearly all the activity can be attributed to the January 16th, 2026, expiration month, where volume has exceeded 23,500 contracts, with most of the action on the buy side, particularly at the 21.00 and 22.00 strike calls. Traders have used multiple block trades to buy options at these strikes, moving the put/call down to 0.13. The combined open interest of these strikes implies these are new positions (suggesting bullish intent). It should be noted that Invesco filed a proxy statement asking shareholders to change the structure of the Invesco QQQ Trust Series 1 from a unit investment trust to an open-ended fund, allowing it to earn revenue from the fund.

Another name exhibiting unusual activity today is Roivant Sciences Ltd. (ROIV - $0.09 to $11.56), as call volume has spiked to 15,066 contracts in morning trading, 100x daily average. Nearly all the volume can be attributed to a large call vertical spread that occurred in the October 17th, 2025, expiration month.  Trader bought the 13.00/15.00 call vertical 7,500 times (a total of 15,000 contracts) for a price of $0.48 when the bid/ask was $0.25 x $0.55. This trade appears to be a roll-down from a long position at the 15.00 strike, per the open interest. In essence, traders closed the long 15.00 calls and opted to open a long position at the 13.00 strike. Adding a position for a debit at a lower call strike suggests bullish intent.

Shares of Netflix Inc. (NFLX - $53.64 to $1,221.53) are down over 4% today after the streaming-video company reported second-quarter results that beat expectations and raised its full-year forecast.  The stock has been a strong performer this year, up nearly 50% off an April low, so today's weakness could be a result of a share price that was priced for perfection, as the P/E multiple had stretched to over 58 times earnings. NFLX shares dropped below their 50-day SMA today for the first time since mid-April.

Netflix reported second-quarter results that exceeded analyst expectation in every major category, with revenue growing to $11.1 billion and earnings jumping to $7.19 a share. The company also raised its forecast for full-year sales and profit margins and expects to generate up to $45.2 billion in sales this year with an operating margin of 29.5%, per Bloomberg.

Option trading in NFLX currently stands at 125,358 contracts in early morning trading, on pace for 19x the daily average, with calls outpacing puts 1.5:1. Leading the way are the following trades, expirations, and strikes:

• July 18th, 2025, 1,200 put accounted for 5,799 contracts; open interest is 5,535 contracts.
• July 18th, 2025, 1250 call accounted for 3,155 contracts; open interest is 2,379 contracts.
• July 18th, 2025, 1190 put accounted for 2,345 contracts; open interest is 2,216 contracts.

New 52-week lows (31 new lows today): Sarepta Therapeutics (SRPT - $3.31 to $18.66), Centene Corp. (CNC - $0.65 to $28.49), Elevance Health Inc. (ELV - $16.49 to $285.96), Molina Healthcare Inc. (MOH - $10.21 to $194.04)

Some unusual put activity is noted today in Kenvue Inc. (KVUE + $0.21 to $22.06). This activity equates to over 58,689 put contracts, 34x average daily put volume. Nearly all the activity stems from multiple calendar spread block orders (totaling around 50,000 contracts) that occurred between the August 15th, 2025, and January 16th, 2026 expirations at the 22.00 and 18.00 strikes. Traders appear to be selling the August 22.00 strike puts to purchase the January 22.00/18.00 put vertical for a net debit of around $0.50. Traders might execute this type of trade if they don't expect much movement from now through the August expiration. This type of trade also allows them to roll the puts multiple times to other months prior to the January 16th expiration, should they choose. This is essentially a longer-term bearish position with a shorter-term neutral bias.

Another example of unusual put activity occurred today in Ehang Holdings Ltd. (EH + $0.02 to $18.90), as put volume stands at 8,737 contracts in morning trading, 10x average daily volume. Activity is heaviest in the August 8th, 2025, expiration, specifically at the 18.00 strike, with total volume representing over 4,000 contracts. Trades have primarily been sellers of the strike at a price of $0.55 when the bid/ask was $0.55 x $0.65. There was no open interest, so we know this represents new positioning (suggesting neutral to bullish intent).

The Cboe Volatility Index (VIX - 0.08 to 16.44) is basically unchanged in morning trading, as equity markets are lower across the board (DJI - 200, SPX - 5, COMPX - 23). VIX movement has occurred within a narrow range today (the intraday range is 16.28 – 16.81). The highest volume contract is the October 22nd, 2025, 20.00 put (volume is 20,021 vs. open interest of 21,263).