Today's Options Market Update

The major indexes are broadly higher following a another favorable read on inflation report, while chipmakers appear to be catching a bid after recently coming under some selling pressure, with heavyweight (NVDA) rising 1.8% in an attempt to rebound from a string a losses.

The Bureau of Economic Analysis released its Personal Consumption Expenditures (PCE) price index for June this morning showing that inflation grew 0.1% for the month, in line with consensus estimate. The year-over-year rate was reported at 2.5%, pegging the forecast estimate. However, year-over-year core inflation that excludes food and energy prices was hotter than expected at 2.6%, topping the Trading Economics' consensus estimate of 2.5%, but was in line with analysts at 0.02% month over month. The PCE report is the Fed's favored gauge of inflation. 

Additionally, personal income grew 0.2% in June, falling short of the consensus of 0.4%, while personal spending grew 0.3%, which was in line with analysts' expectations.

Overall, the reports reflected a softer inflation picture, which may solidify investor expectations of the Federal Reserve cutting its benchmark rate in September. 

The 10-year Treasury note yield ($TNX) is lower by ~5 basis points to 4.21%.

The U.S. Dollar Index ($DXY) is down 0.08% at 104.27.

The Cboe Volatility Index^® ($VIX) has been in negative territory all day today and was last seen lower by 1.96 at 16.50.

WTI Crude Oil (/CL) is lower by ~1.15% to $77.38 per barrel.

Gold prices have traded in a range of $2,354.60 to $2,389.70 and were last seen trading higher by 1.33% to $2,384.90/oz.

Natural Gas prices have traded in a range of $2.05-2.10 so far today and were last seen trading lower by 0.68% to $2.06/MMBtu.

Bitcoin (/BTC) is trading higher by 2.57% to $67,415.00 today.

Source: Schwab Center for Financial Research

Shares of Dow-component 3M Company (MMM + $16.39 to $119.78) are trading higher to continue a bounce off the 50-day simple moving average (SMA) after the multinational conglomerate reported Q2 EPS of $1.93, excluding non-recurring items ($0.25 beat) on revenue that rose 1.1% year-over-year (y/y) to $6.02B (above the $5.85B expected). The company has spent the last year cutting expenses, which included reducing its workforce by 10%. MMM also adjusted its full-year 2024 (FY24) EPS guidance to a range of $7.00-7.30 from a prior outlook of $6.80-7.30, compared to the FactSet estimate of $7.20. The company said it is focused on three priorities: driving sustained organic revenue growth, increasing operational performance, and effectively deploying capital. Calls are outnumbering puts ~3:1 with the August 2nd 130.00 call seeing the most action from traders (volume is 13,624).

Bristol-Myers Squibb (BMY + $3.43 to $48.70) is also trading higher and continues to break out of a recent range after the global biopharmaceutical company posted Q2 EPS of $2.07, excluding non-recurring items, exceeding the $1.62 FactSet estimate, with revenues growing 9.0% y/y to $12.20B, north of the projected $11.54B. BMY also boosted its FY24 EPS outlook by $0.20 to a range of $0.60-0.90 (from a prior view of $0.40-0.70), compared to the Street's forecast of $0.51. The company also increased its gross margin outlook and said revenues for the year should come in at the upper end of its guidance. BMY said its Q2 results were driven by its growth portfolio and performance of its blood clot and stroke drug Eliquis. Calls are outpacing puts ~4:1 with the July 26th 50.00 call leading the way (volume is 6,038).

New 52-week highs (266 new highs today): Abbvie Inc. (ABBV + $3.82 to $185.99), Colgate-Palmolive Company (CL + $3.08 to $99.57), Toll Brothers Inc. (TOL + $7.13 to $139.75)

Some unusual call activity (~19:1 calls over puts) is being seen in Sunnova Energy International Inc. (NOVA + $0.41 to $7.95) with the August 16th 8.00 call topping the list as volume is 5,718 versus open interest of 1,954. The activity included two large blocks (2,100 & 1,400) that were bought at $1.02 when the bid/ask spread was $0.90 x $1.10. It's likely that we have fresh positioning given the open interest figure of 1,954 contracts, and since the trades took place above the midpoint of the spread this suggests bullish intent.

Shares of DexCom Inc. (DXCM - $43.30 to $64.55) are tumbling over 35% at the time of this writing this morning after the glucose-monitoring-system manufacturer lowered its FY24 revenue outlook to a range of $4.00-4.05B from $4.20-4.35B, and below the FactSet estimate of $4.33B. The company noted on its earnings call with analysts that it is seeing fewer new customers than expected after a revamp of its salesforce and lower revenue per customer than anticipated. DXCM added that revenues are also being impacted by higher rebates, as some large health plans administering government programs shifted how they reimbursed for Dexcom's products. The lowered guidance accompanied its Q2 earnings report where DXCM topped EPS estimates, but its revenues came in just shy of forecasts. Calls and puts are running nearly at the same pace with the January 17th 2025 85.00 call being the highest volume contract (volume is 1,614).

Also trading to the downside this morning is Saia Inc. (SAIA - $100.34 to $388.77) after the transport company reported Q2 EPS of $3.83, south of the FactSet estimate of $4.01, while revenues, although rising 18.5% y/y to $823.2M, came in slightly below the anticipated $826.6M. The company cited impacts from new-terminal openings, as well as skewed business mix toward retail that has been a drag on revenue per bill. SAIA also issued FY24 capital expenditure guidance that was modestly below the Street's estimates. Puts are outnumbering calls ~3:1 with the August 16th 400.00 put seeing the most action from traders (volume is 174).

New 52-week lows (29 new lows today): Carter's Inc. (CRI - $4.41 to $55.50), Las Vegas Sands (LVS - $0.01 to $39.33), Stellantis N.V. (STLA - $0.48 to $17.61)

Some unusual put activity (2,000:1 puts over calls) is being seen in the iShares JPMorgan USD Emerging Markets Bond ETF (EMB + $0.54 to $89.80) which is primarily being driven by a 10,000 contract block that was sold on the December 20th 86.00 put. The transaction took place at $0.94 when the bid-ask spread was $0.00 – $2.46 (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 neutral to bullish in nature since the trade took place below the midpoint of the bid/ask spread.

P10 Inc. (PX + $0.04 to $10.09): Option volume is running at ~116x the daily average on this provider of private markets solutions which is primarily being driven by activity on the September 20th 10.00 call. Volume on this contract is 4,001 (vs. open interest of 3), which mostly consisted of a 1,400 contract block that was sold at the bid price of $0.55. We know that this block is a new position based on the open interest figure and we can assume that the intent is neutral-bearish in nature since the trade took place at the bid price.

Baozun Inc. (BZUN + $0.09 to $2.50): Option volume is running at ~19x the daily average on this e-commerce service provider which is primarily being driven by activity on the January 17th 2.50 call as volume is 2,577 (vs. open interest of 77), with notable 465 and 416 contract blocks bought at the ask prices of $0.60 each. We know we have new positioning based on the open interest figure and the call buying suggests bullish intent.

The Cboe Volatility Index (VIX – 1.96 to 16.50) has been in negative territory all day today (the intraday range is 18.08 - 16.46) as equity markets are higher across the board around the midday mark (DJI + 788, SPX + 83, COMPX + 261). VIX option volume has been below average today at 245,790 contracts, as the index is missing from the "Top Volume by Underlying" list. The volume put/call ratio is currently 0.44 with the highest volume contract being the November 20th 22.00 call (volume is 21,154 vs. open interest of 15,966).