Today's Options Market Update

After snapping a five-week losing streak, major indexes edged up today on fresh ceasefire hopes. Investors approach Monday focused on war news and last Friday's 178,000 rise in March nonfarm payrolls—almost triple what analysts had expected. The market was closed Friday and today is the first full day stocks trade on that report, though there could be distractions as four astronauts fly around the moon for the first time since 1972.

Despite media reports that the U.S. and Iran have received a ceasefire plan, Treasury yields are flat and crude remains elevated near $110 per barrel, possibly weighing those reports with yesterday's threats from President Trump and his deadline of late Tuesday for Iran to re-open the Strait of Hormuz. Oil's persistent gains also put this week's inflation reports front and center. The Federal Reserve's favored Personal Consumption Expenditures (PCE) price index is due later this week, along with minutes from the Fed's last meeting. Before that, Trump holds a news conference at 1 p.m. ET today that could command attention for any new war tidings.

Major indexes climbed Thursday before the jobs data, making last week the first to finish positive since February. That day's rebound from early losses marked one of the first sessions since the war where stocks rose along with oil instead of being repelled by crude's rally. I’m still not sure that markets have capitulated. We are registering higher closes. The VIX is still elevated, but it isn't extreme.

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is higher by ~2 basis point to 4.331%.

The U.S. Dollar Index ($DXY) is lower by 0.22 to 99.81.

WTI Crude Oil (/CL) is lower by 0.51% to $110.97/barrel.

Gold prices have traded in a range of $4,626.20-4,733.10 and were last seen trading higher by ~0.66% to $4,710.60/oz.

Natural Gas prices for March futures have traded in a range of $2.769-2.868 today and were last seen trading higher by 0.18% to $2.805.

Bitcoin (BTC) is higher by ~0.93% over the last 24 hours to $69,620.30 today.

Shares of Netflix Inc. (NFLX + $1.88 to $100.54) are higher after Goldman Sachs upgraded the streaming giant to “Buy” from “Neutral” and increased their price target on the stock to $120.00 from $100.00. Analysts at Goldman Sachs said that the stock offers a “more positive risk/reward from current levels”, now that the overhang from the company’s now-abandoned bid to acquire Warner Bros. Discovery’s streaming and studio assets. Calls are outnumbering puts better than 2:1 with the April 10^th 100.00 call leading the way (volume is 17,269).

Also trading to the upside this morning is First American Financial Corp. (FAF + $1.71 to $60.00) after Barclays upgraded the financial services provider to “Overweight” from “Equal Weight” and bumped their price target on the stock to $72.00 from $70.00, citing valuation. Option volume is tepid at the time of this writing with the April 10^th 60.00 put being the highest volume contract (volume is 791).

New 52-week highs (54 new highs today): Aehr Test Systems Corp. (AEHR + $6.83 to $51.15), Entergy Corp. (ETR + $0.23 to $115.13), Marvell Technology Inc. (MRVL + $1.14 to $108.25)

Some unusual call activity (~6:1 calls over puts) is being seen in First Solar Inc. (FSLR + $0.49 to $195.81) which is primarily driven by a 2,790 contract block that was bought on the April 10^th 200.00 call at the ask price of $3.25 (open interest is 208). We know that this block is a new position based on the open interest figure, and we can assume that the intent is bullish in nature since the trade took place at the ask price.

Shares of Dow Inc. (DOW - $1.32 to $40.08) are moving lower this morning after Bank of America Securities (BofA) downgraded the chemical maker to “Underperform” from “Neutral”, while raising their price target on the stock to $35.00 from $31.00. BofA analyst Matthew DeYoe cited ongoing concerns about structural oversupply and believes the company’s earnings levels are unsustainable. Calls are outnumbering puts ~6:1 with the June 18^th 45.00 call being the highest volume contract (volume is 1,407).

Also trading to the downside is Kinsale Capital Group Inc. (KNSL - $3.00 to $341.90) after Morgan Stanley downgraded the provider of property and casualty insurance products to “Equal Weight” from “Overweight” and cut their price target on the stock to $350.00 from $450.00. Analysts at Morgan Stanley cited slower growth expectations in the softening property and casualty cycle along with increasing excess and surplus competition, which “create continued growth headwinds”. Option volume is tepid at the time of this writing with the July 17^th 310.00 put being the highest volume contract (volume is 1).

New 52-week lows (31 new lows today): Hon Industries Inc. (HNI - $0.64 to $31.83), Keurig Dr Pepper Inc. (KDP - $0.01 to $25.30), Monday.com Ltd. (MNDY - $1.05 to $67.29)

Some unusual put activity (~46:1 puts over calls) is being seen in Clorox Co. (CLX + $2.58 to $103.72) which is primarily driven by a 2,180 contract block that was bought on the April 17^th 90.00 put for $0.18 when the bid/ask spread was $0.05 x $0.20 (open interest is 618). 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.

Canadian National Railway Corp. (CNI + $0.87 to $105.05): Option volume is running at ~369x the daily average on this railway operator which is primarily being driven by a couple of large blocks that simultaneously traded on the October 16^th expiration earlier this morning:

• 115.00 call (open interest is 49): A 10,000 contract block traded for $3.80 when the bid/ask spread was $2.85 x $4.60.
• 125.00 call (open interest is 9): A 10,000 contract block was bought at the ask price of $1.60.

We know that these blocks are new positions based on the respective open interest figures, and it appears (since the block trade on the 125.00 call took place at the ask price) that a $10.00-wide bear call spread was established for a net credit of $2.20 (x 10K contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that CNI will close below the $125.00 price level at expiration.

Enovix Corp. (ENVX + $0.50 to $5.57): Option volume is running at ~11x the daily average on this maker of lithium-ion battery cells which is primarily driven by a 10,000 contract block that was bought on the October 16^th 7.00 call at the ask price of $1.20 (open interest is 212). We know that this block is a new position based on the open interest figure, and we can assume that the intent is bullish in nature since the trade took place at the ask price.

STMicroelectronics N.V. (STM + $1.66 to $35.98): Option volume is running at over 6x the daily average on this chip maker which is primarily driven by activity on the May 15^th 40.00 call. Volume on this contract is 5,495 versus open interest of 485, so it’s likely that nearly all the volume represents fresh positioning. The bulk of the transactions consisted of various-sized blocks that were bought at various times for between $1.20-1.40 each, which suggests bullish intent.

The Cboe Volatility Index (VIX + 0.20 to 24.07) has been on both sides of the unchanged line today (the intraday range is 23.78-25.30), as equity markets are higher across the board around the midday mark (DJI + 104, SPX + 17, $COMP + 77). VIX option volume is above average today at 390,223 contracts, and calls are outnumbering puts ~5:1 so far today.