Today's Options Market Update

Stocks inched up early despite rising oil prices after the weekend brought little progress on Middle East de-escalation and more U.S. troops arrived in the region. There were mixed signals this morning on transit through the strait and the status of peace negotiations, but yields fell as investors appeared more focused on the positive. The fate of the markets appears to be tied to Iran and the trajectory of oil prices. If there is an agreed upon ceasefire, or a substantial de-escalation, it seems near certain that stocks will rally substantially, especially given their current oversold status.

Data this week builds toward Friday's March nonfarm payrolls report. Along the way, investors receive the February Job Openings and Labor Turnover Survey, or JOLTS, tomorrow and more job readings Wednesday and Thursday. In a rare twist, nonfarm payrolls data coincides with the stock market's Good Friday closure, though bond trading does occur that day with an early close. Checking today's light calendar, Federal Reserve Chairman Jerome Powell speaks at 10:30 a.m. ET in a moderated discussion at Harvard. It's unclear if he'll address monetary policy.

Friday was another dismal day as almost every sector dropped amid oil's rally, wrapping up the fifth losing week in a row. Investors were also spooked Friday as China's commerce ministry started probes into U.S. trade practices that have slowed the flow of Chinese goods into the U.S. The move threatens a tenuous trade truce. The Nasdaq Composite enters this week in correction territory, down 10% from recent highs, while the S&P 500 Index is down almost 9%. Nike (NKE) reports tomorrow afternoon—this week's earnings highlight.

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is lower by ~10 basis point to 4.334%.

The U.S. Dollar Index ($DXY) is higher by 0.42 to 100.57.

WTI Crude Oil (/CL) is higher by 2.97% to $102.60/barrel.

Gold prices have traded in a range of $4,442.00-4,574.00 and were last seen trading lower by ~2.08% to $4,489.20/oz.

Natural Gas prices for March futures have traded in a range of $2.851-3.057 today and were last seen trading lower by 5.39% to $2.862.

Bitcoin (BTC) is higher by ~2.40% over the last 24 hours to $67,539.97 today.

Shares of United Therapeutics Inc. (UTHR + $73.12 to $595.95) after the biotech firm said that its TETON-1 study evaluating the use of nebulized Tyvaso for the treatment of idiopathic pulmonary fibrosis met its primary efficacy endpoint. Calls are outnumbering puts better than 2:1 with the April 17^th 600.00 call being the highest volume contract (volume is 4,174).

Also trading to the upside this morning is Adecoagro S.A. (AGRO + $1.41 to $15.46) after UBS upgraded the agricultural company to “Buy” from “Neutral” and increased their price target on the stock to $16.20 from $8.00. UBS analyst Matheus Enfeldt said that company’s acquisition of Profertil, along with higher sugar, ethanol and urea prices are not being reflected in the stock. Calls are outpacing puts ~7:1 with the September 18^th 15.00 call leading the way (volume is 651).

New 52-week highs (95 new highs today): Cf Industries Holdings Inc. (CF + $2.40 to $138.85), Chevron Corp. (CVX + $2.65 to $213.80), EOG Resources Inc. (EOG + $1.48 to $151.04)

Some unusual call activity (nearly 5:1 calls over puts) is being seen in Alcoa Corp. (AA + $5.96 to $64.37) as option traders primarily target the April 10^th 70.00 call. Volume on this contract is 3,268 versus open interest of 54, 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 $1.64-1.74 each, which suggests bullish intent. Shares of AA are trading ~10% higher today on news that Iran’s Revolutionary Guard Corps struck aluminum smelters in Bahrain and Abu Dhabi over the weekend.

Shares of Sysco Corp. (SYY - $9.40 to $72.40) are moving lower this morning after the food service giant announced that it is buying privately held Jetro Restaurant Depot in a cash-and-stock deal valued at roughly $29.1B. According to the Wall Street Journal, the deal is “meant to help Sysco expand into the high-margin and growing cash-and-carry distribution model and serve more customers locally”. Calls are outnumbering puts ~2:1 with the May 15^th 75.00 call being the highest volume contract (volume is 2,668).

Also trading to the downside is Boston Scientific Co. (BSX - $6.16 to $63.01) after Raymond James downgraded the medical device maker to “Outperform” from “Strong Buy” and lowered their price target on the stock to $88.00 from $97.00, citing increased variability in the company’s key growth drivers. However, Raymond James analyst Jayson Bedford said he still holds a positive long-term view, stating “Our overarching view of Boston Scientific (BSX) as one of the highest quality, and fastest growing, companies in large cap Med Tech has not changed”. Calls are outnumbering puts ~2:1 with the June 18^th 82.50 call seeing the most action from traders (volume is 17,630).

New 52-week lows (255 new lows today): Aecom Technology Corp. (ACM - $0.65 to $84.81), Baxter International Inc. (BAX - $0.07 to $15.90), Insulet Corp. (PODD + $1.04 to $209.26)

Some unusual put activity (~60:1 puts over calls) is being seen in Element Solutions Inc. (ESI - $0.48 to $32.88) which is primarily driven by a 3,000 contract block that was bought on the May 15^th 32.00 call at the ask price of $2.05 (open interest is 0). 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.

Sonoco Products Company (SON + $0.64 to $53.84): Option volume is running at ~300x the daily average on this packaging company which is primarily being driven by a couple of large blocks that simultaneously traded on the May 15^th expiration earlier this morning:

• 50.00 call (open interest is 0): A 2,780 contract block was bought for $4.96 when the bid/ask spread was $3.50 x $5.50.
• 60.00 call (open interest is 5): A 2,780 contract block was sold for $0.26 when the bid/ask spread was $0.25 x $1.05.

We know that both 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 $4.70 (x 2,780 contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that SON will close above the break-even price of $54.70 at expiration.

Fidelity National Financial Inc. (FNF + $0.67 to $46.35): Option volume is running at ~47x the daily average on this financial services provider which is primarily driven by a 3,700 contract block that was bought on the April 17^th 40.00 put for $0.35 when the bid/ask spread was $0.15 x $0.40 (open interest is 460). 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.

Vista Energy S.A.B. de C.V. (VIST + $3.55 to $77.76): Option volume is running at ~25x the daily average on this oil & gas producer which is primarily being driven by two large blocks that were bought around the same time on the May 15^th 90.00 call – a 2,190 contract block and a 1,800 contract block were bought for $2.22 when the bid/ask spread was $1.15 x $1.30 (open interest is 27). We know that these blocks are new position based on the open interest figure and we can assume that the intent is bullish in nature since both trades took place above the midpoint of the bid/ask spread.

The Cboe Volatility Index (VIX - 0.73 to 30.32) has been on both sides of the unchanged line today (the intraday range is 29.33-31.32), as equity markets are mixed around the midday mark (DJI + 210, SPX + 2, $COMP - 59). VIX option volume is average today at 372,221 contracts, and calls are outnumbering puts ~4:3 so far today.