Today's Options Market Update

Tech Rebounds but DJIA Falls

February 21, 2025 Joe Mazzola

Mega caps rose in pre-market trading even as the DJIA got clipped by a sharp drop in UnitedHealth shares. Sentiment, existing home sales, and S&P Global PMI data are on tap.

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Pressure on the venerable Dow Jones Industrial Average ($DJI) yesterday stemmed from Walmart's (WMT) disappointing outlook. Today, the $DJI is again in the red, this time from a Wall Street Journal report that the Department of Justice is looking into Medicare billing practices of Dow component UnitedHealth Group (UNH). However, other major indexes were flat-to-a-bit-higher ahead of Friday's open on support from mega caps as yields eased.

Stocks are starting to look tired, with record highs this week coming on lower-than-average volume and small index gains. This could point toward consolidation and potential choppiness. Consumer-related names pulled back yesterday on worries that Walmart's forecast might reflect slowing demand, but major indexes finished well off their lows amid continued resilience and a prevailing "buy the dip" attitude. Technically, support for the S&P 500 index (SPX) may be around 6,050 with resistance at 6,150.

Data might provide a wake-up call as the month winds down. Next Friday features January personal consumption expenditures (PCE) price index data, the Federal Reserve's favored inflation metric. NVIDIA (NVDA) earnings next Wednesday are another highlight. January existing home sales and February S&P Global U.S. manufacturing and services Purchasing Managers' Index (PMI) loom this morning and may also give direction, with the housing market still squeezed by high prices and lack of inventory.

Morning Rush

The 10-year U.S. Treasury yield (TNX) is down three basis points to 4.46%.

The U.S. Dollar Index ($DXY) is up to 106.52.

The CBOE Volatility Index^® (VIX) is jumping higher, now 16.42.

WTI Crude Oil (/CL) is down 1.50% to $71.33/barrel.

Bitcoin (BTC) is up slightly today, to $98,970.

Ethereum (ETH) is higher by 2% today to $2,810.

Source: Schwab Center for Financial Research

Today's Bullish Activity

Shares of Celsius Holdings Inc. (CELH + $6.89 to $32.42) are up over 25% in morning trading, on pace for its largest daily percentage jump since November 2020, after the energy beverage company reported Q4 revenue and earnings that beat expectations and announced the acquisition of rival Alani Nu. For Q4, Celsius posted net sales of $332.2 million and EPS of $0.14. Analysts had expected $328 million and EPS of $0.11, respectively, per FactSet. This was a welcome change for investors after the company's Q3 report, last September, when it reported earnings and revenue that both missed Wall Street estimates. Prior to the announcement, shares of CELH had fallen over 70% from their 52-week high price of $99.62.

In addition, the company announced that it would acquire rival Alani Nu, another growing energy-drink brand fueled by social-media influencers, for $1.8 billion, comprising a mix of cash and stock. Per the press release, "With the addition of Alani Nu, the combined Celsius platform is expected to drive ~$2 billion in sales across a differentiated energy portfolio that is firmly aligned with the ongoing consumer shift towards premium, functional beverage options that cater to health & wellness and active lifestyles.

Option trading in CELH currently stands at 218,382 contracts, 15x the daily average, with calls outpacing puts 4:1. Leading the way are the following trades, expirations, and strikes:

June 20th, 2025, 40.00 call accounted for 18,483 contracts; open interest is 54,023 contracts.
March 21st, 2025, 40.00 call accounted for 11,765 contracts; open interest is 12,733 contracts.
February 21st, 2025, 35.00 call accounted for 10,086 contracts; open interest is 11,909 contracts.

New 52-week highs (72 new highs today): Alibaba Group Holding (BABA + $8.53 to $144.50), Applied Digital Corp. (APLD + $1.63 to $11.80), Rlx Technology Inc. (RLX + $0.15 to $2.46), Xpeng Inc. (XPEV + $1.32 to $19.02), Innodata Inc. (INOD + $13.61 to $68.17)

Notable Call Activity

Unusual call activity is noted today in Tuya Inc. (TUYA + $0.30 to $4.18), as call volume currently stand at 9,443 contracts, 18x the average daily volume. Most of the activity can be attributed to the March 21st, 2025, expiration month where traders have targeted the 5.00 strike call. We've seen over 6,700 calls sold through multiple large block trades for a price of $0.70 when the bid/ask was $0.70 x $0.80. We believe this represents new positioning, given the open interest of 2,975 contracts (suggesting neutral to bearish). Tuya recently announced a collaboration with DeepSeek, implementing its advanced AI for its own "smart pet" products.

Other call activity of note can be seen today in Dun Bradstreet Holdings Inc. (DNB - 0.16 to $9.28), as call activity has spiked to 5,054 contracts in morning trading (80x daily average). Traders have added long call vertical positions in the April 17th, 2025, expiration month. The 10.00 / 12.50 call vertical spread was purchased through multiple block orders for an average price of $0.40 when the bid ask was $.30 x $0.40. The appears to be new positioning, given the collective open interest of 1,028 contracts (suggesting bullish intent). Shares of DNB have fallen over 11% since the company announced earnings back on February 20th.

Today's Bearish Activity

Shares of Akamai Technologies Inc. (AKAM - $15.58 to $82.45) are getting clobbered today, down over 16% to a 52-week low, after the infrastructure software company gave an outlook that is weaker than expected. Akamai forecasted adjusted EPS for Q1 of $1.54 to $1.59, versus estimates for $1.61. The lowered earnings estimates are driven by lower sales revenue of $1.00 billion to $1.02 billion, versus estimates of $1.04 billion and decreased operating margins of 28%, versus estimates for 28.8%.

Per Bloomberg, the company said it expects headwinds from TikTok, its largest customer for content-delivery network services. The social-media platform is planning to move its content delivery internally, likely shaving off 1% - 2% of Akamai's revenue growth in 2025. Akamai also plans to move about $50 million of its cloud-computing business to partners, which is expected to reduce revenue growth in that business to around 15%, down from 25% in 2024.

AKAM shares have received some price target adjustments today, including BofA (to $100.00 from $125.00), Piper Sandler (to $100.00 from $112.00), and TD Cowen (to $98.00 from $125.00). Shares are down over 27% from their 52-week high price of $113.36.

Option trading in AKAM currently stands at 32,555 contracts, 7x the daily average, with calls outpacing puts 1.5:1. Leading the way are the following trades, expirations, and strikes:

March 21st, 2025, 90.00 call accounted for 6,809 contracts; open interest is 384 contracts.
March 7th, 2025, 95.00 call accounted for 1,447 contracts; open interest is 1,448 contracts.
February 21st, 2025, 85.00 put accounted for 1,161 contracts; open interest is 2,346 contracts.

New 52-week lows (96 new lows today Akamai Technologies Inc. (AKAM - $15.58 to $82.45), Arbor Reality Trust (ABR - $1.55 to $12.29), Trade Desk Inc. (TTD - $3.22 to $72.51), Celanese Corp. (CE - $1.13 to $51.48), Align Technologies (ALGN - $8.75 to $189.31)

Notable Put Activity

Some unusual put activity is noted today in Celanese Corp. (CE - $1.13 to $51.48). This activity equates to over 27,537 put contracts, 10x average daily put volume. Traders are selling the April 17th, 2025, expiration 50.00 strike put to buy the 55.00 strike call in the same expiration month. This trade has already transacted 20,000 times. The 50.00 strike put selling price of $2.70 covers the cost of the 55.00 strike call price of $2.35, creating a credit for the spread. This trade is known as a risk reversal which can simulate the profit and loss behavior of owning an underlying security (suggesting bullish intent). Open interest for the two strikes amounted to a collective 45 contracts, so we know this is new positioning. Shares of CE hit a 52-week low price of $51.48 today.

Unusual put activity can also be seen in Floor & Decor Holdings (FND - $0.67 to $92.16), as put volume stands at 13,492 contracts in morning trading, 9x average daily volume. Much of that volume can be attributed to activity in the April 17th, 2025, expiration month, where approximately 8,000 contracts have already traded. Activity is heaviest at the 80.00 strike, due to a massive 7,140 contract block trade where traders paid $1.30 for the puts when the bid/ask was $0.75 x $1.55. There were only 171 contracts of open interest coming into today, so we know this is new positioning (suggesting bearish intent). Shares of FND traded in a wide range yesterday, ultimately closing $11.00 lower than the opening print. This was on the heels of the company's latest earnings announcement.

Gauging Volatility

The Cboe Volatility Index (VIX + 0.77 to 16.43) has traded on both sides of the unchanged line, as equity markets are down in morning trading (DJI - 506, SPX - 58, COMPX - 251). VIX movement has occurred within a wide range today (the intraday range is 15.28 – 16.49). VIX option volume is muted today, given its omission from the "Top Volume by Underlying" list. The volume put/call ratio is currently 0.28, and the highest volume contract is the March 18th, 2025, 55.00 call (volume is 31,035 vs. open interest of 76,242).

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