Today's Options Market Update

Tech stocks rose early Monday, an early sign of a possible Santa Claus rally at the start of a holiday-shortened trading week that's light on earnings reports and data releases. Markets close at 1 p.m. ET on Wednesday for Christmas Eve before shutting for Thursday's Christmas holiday.

The S&P 500 index (SPX) is at risk of its first losing month since April, though a strong week could push it into the green. Year-end "window dressing" by institutional investors may provide a boost, but any big move in either direction over the coming days might lack conviction because volume usually turns lower during the holiday period.

The major indexes posted a second-straight winning session Friday following a four-day losing streak, lifted by rebounds in beaten-down Oracle (ORCL) and Nvidia (NVDA) after a bullish earnings report from Micron Technology (MU) eased jitters over the AI trade. Still, the S&P 500 and Nasdaq only eked out gains for the week, while the Dow Jones Industrial Average closed lower. An updated estimate of third-quarter gross domestic product (GDP) due at 8:30 a.m. ET tomorrow is expected to show seasonally adjusted annual growth of 3%, according to the Briefing.com consensus. That's down from the prior estimate of 3.8%.

Source: Schwab Center for Financial Research

The 10-year U.S. Treasury yield (TNX) is higher by ~1 basis points to 4.167%.

The U.S. Dollar Index ($DXY) is lower by 0.352 to 98.247.

WTI Crude Oil (/CL) is higher by 2.62% to $58.00/barrel.

Gold prices have traded in a range of $4,367.90-$4,465.10 and were last seen trading higher by ~1.50% to $4,453.20/oz.

Natural Gas prices have traded in a range of $3.80-4.14 today and were last seen trading lower by 4.37% to $3.81.

Bitcoin (BTC) is higher by ~0.97% to $89,477.11 today.

Shares of Cummins Inc. (CMI + $7.31 to $514.03) are moving higher this morning after Raymond James upgraded the truck engine maker to “Outperform” from “Market Perform” and put a $585.00 price target on the stock. Analysts at Raymond James see a compelling risk/reward trade-off, with 20% upside in their bull case, which factors a faster recovery in truck markets. Option volume is relatively light with the January 16^th 550.00 call being the highest volume contract (volume is 32).

Also trading to the upside this morning is Ollie’s Bargain Outlet Holdings Inc. (OLLI + $2.41 to $110.38) after Loop Capital upgraded the discount retailer to “Buy” from “Hold” and bumped their price target on the stock to $135.00 from $130.00. Analysts at Loop Capital believe OLLI could benefit from a “trade down” in consumer behavior, strategic benefits from the Big Lots liquidation and a positive outlook from a recent store tour. Option volume is relatively light with the January 16^th 115.00 call being the highest volume contract (volume is 19).

New 52-week highs (152 new highs today): Alcoa Corp. (AA + $1.76 to $53.01), Citigroup Inc. (C + $2.01 to $116.87), General Motors Company (GM + $0.66 to $83.01)

Some unusual call activity (~9:1 calls over puts) is being seen in Hertz Global Holdings Inc. (HTZ + $0.65 to $5.80) as option traders primarily target the February 20^th 5.00 call. Volume on this contract is 3,966 versus open interest of 0, so we know that all the volume represents fresh positioning (assuming no day trades). The majority of the transactions consisted of various-sized blocks that were bought at various times for between $0.95-1.10 each (including a 1,050 contract block that was bought at the ask price of $1.00), which suggests bullish intent.

Shares of Netflix Inc. (NFLX - $1.11 to $93.28) are moving lower this morning following news that Paramount Skydance (PSKY + $0.96 to $14.01) raised the termination fee on their offer for Warner Bros. Discovery (WBD + $0.87 to $28.64) from $5.0B to $5.8B, which matches Netflix’s break-up fee in the event regulators block the deal. Paramount Skydance’s $30.00/share offer for WBD is above Netflix’s offer and is expected to be under less scrutiny from regulators if WBD accepted their offer. NFLX calls are outnumbering puts ~2:1 with the January 16^th 100.00 call seeing the most action from traders (volume is 7,897).

Also trading to the downside this morning is Lamb Weston Holdings Inc. (LW - $0.96 to $42.98) after BNP Paribas downgraded the maker of frozen potato products to “Neutral” from “Outperform” and cut their price target on the stock to $48.00 from $66.00. The downgrade follows Lamb Weston’s disappointing Q2 earnings report, and subsequent 25% drop in the stock on Friday. Calls are outpacing puts ~3:1 with the February 20^th 47.50 call being the highest volume contract (volume is 2,126).

New 52-week lows (58 new lows today): American Tower Corp. (AMT + $0.52 to $172.93), Clorox Company (CLX + $0.31 to $98.62), Vici Properties Inc. (VICI + $0.07 to $27.77)

Some unusual put activity (~40:1 puts over calls) is being seen in Fox Corp. (FOXA + $2.44 to $74.21) which is primarily driven by a 4,000 contract block that was sold on the January 16^th 65.00 put for $0.25 when the bid/ask spread was $0.05 x $0.60 (open interest is 124). We know that this block is a new position based on the open interest figure, and we can assume that the block trader believes that FOXA will close above the $65.00 price level and/or is comfortable taking a long 400,000 share position at an effective purchase price of $64.75 if FOXA closes below $65.00 at expiration.

Dominion Energy Inc. (D - $2.74 to $56.69): Option volume is running at ~16x the daily average on this multi-utility company which is primarily being driven by a couple of large blocks that simultaneously traded on the February 2026 expiration earlier this morning:

• 57.50 call (open interest is 0): A 2,600 contract block was bought for $1.98 when the bid/ask spread was $1.70 x $2.10.
• 60.00 call (open interest is 25): A 2,600 contract block was sold at the bid price of $0.80.

We know that these blocks are new positions based on the respective open interest figures, and it appears that a $2.50-wide bull call spread was established for a net debit of $1.18 (x 2,600 contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that D will close above the break-even price of $58.68 at expiration.

The GEO Group Inc. (GEO + $0.59 to $16.57): Option volume is running at ~15x the daily average on this provider of commercial services and supplies which is primarily driven by a 3,000 contract block that was bought on the January 2027 25.00 call for $2.00 when the bid/ask spread was $1.65 x $2.05 (open interest is 663). 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 above the midpoint of the bid/ask spread.

Rio Tinto PLC (RIO + $1.77 to $80.09): Option volume is running at ~7x the daily average on this metals and mining company which is primarily driven by a 3,500 contract block that was bought on the September 2026 90.00 call for $3.19 when the bid/ask spread was $2.80 x $3.20 (open interest is 82). 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 above the midpoint of the bid/ask spread.

The Cboe Volatility Index (VIX - 0.50 to 14.41) has been on both sides of the unchanged line today (the intraday range is 14.40-15.26), as equity markets are higher across the board around the midday mark (DJI + 264, SPX + 44, $COMP + 146). VIX option volume is slightly above average today at 367,533 contracts, and calls are outpacing puts ~2:1 so far today.