Today's Options Market Update

Solid earnings from Walmart (WMT) and slightly lower Treasury yields gave U.S. major indexes a light boost early Thursday, one day after Wall Street rang in new record highs on constructive inflation data.

Yesterday's April Consumer Price Index (CPI) and April Retail Sales reports reinforced impressions of a slower U.S. economy following a recent downturn in jobs growth. CPI rose 0.3% in April while retail sales were flat. The cooler data sent major indexes to fresh all-time highs for the first time since late March amid hopes that rate cuts remain possible this year.

Futures trading still projects nearly one in three chances of a Federal Reserve rate cut in July, though most analysts believe September is likely the earliest date. Another cut might follow in December, the futures market indicates.

Today features a full platter of data, including Weekly Initial Jobless Claims, several Fed speakers, housing starts and building permits, and industrial production. Two short-term Treasury auctions also loom, and investors mull earnings not just from Walmart (see more below) but also Deere (DE) and Applied Materials (AMAT).

So far, today's data, including a drop in jobless claims, isn't lighting any fireworks but generally came in softer than expected for most reports ahead of the open.

The next key data point, one could argue, is earnings this coming Wednesday from chip giant Nvidia (NVDA), the last mega cap to report.

"If Nvidia can deliver around a $2 billion beat on revenue guidance this would likely be enough to keep AI secular growth story going, sentiment-wise," said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research.

The 10-year Treasury note yield ($TNX) is higher by ~1 basis point to 4.367%.

The U.S. Dollar Index ($DXY) is higher by 0.11% to 104.46.

The Cboe Volatility Index® ($VIX) has been in relatively tight range today (12.33-12.58) and was last seen higher by 0.07 at 12.52.

WTI Crude Oil (/CL) is up roughly 0.60% to $79.11 per barrel.

Gold prices have traded in a range of $2,375.20 to $2,402.70 and were last seen trading ~0.40% lower to $2,385.00/oz.

Natural Gas prices have traded in a range of $2.386-2.575 so far today and were last seen trading ~2.86% higher to $2.487/MMBtu.

Bitcoin (/BTC) is currently down roughly 2% to 64,939.30 today.

Source: Schwab Center for Financial Research

Gapping up to all-time highs this morning is Walmart Inc. (WMT + $3.86 to $63.69) after the retail giant reported Q1 earnings of $0.60 per share, excluding non-recurring items ($0.07 beat) on revenue that increased 6.0% year-over-year (YoY) to $161.5B (above the $159.57B expected) as total US comparable same-store sales (ex-fuel) increased 3.9% YoY. Looking ahead, the company said that Q2 EPS is expected to come in a range of $0.62-0.65 and Q2 revenue is expected to come in a range of ~$167.29-168.58B versus the respective $0.64 & $167.62B FactSet consensus estimates. Calls are outnumbering puts roughly 2:1 with the May 17^th 64.00 call seeing the most action from traders (volume is 27,964).

Also trading to the upside this morning is Canada Goose Inc. (GOOS + $1.95 to $13.37) after the luxury parka maker reported Q4 adjusted earnings of C$0.19 per share (C$0.13 beat) on revenue that increased 22% year-over-year C$358.0M (above the C$316M expected). Regarding guidance, the company said that it expects fiscal-year 2025 (FY25) adjusted net income to grow in the mid-teen percentages YoY (vs. the FactSet consensus estimate of ~4% EPS growth) and total FY25 revenue to grow in the low-single-digits YoY (vs. the FactSet consensus estimate of ~5% revenue growth). Calls are outnumbering puts ~5:1 with the May 17^th 14.00 call being the highest volume contract (volume is 1,835).

New 52-week highs (213 new highs today): Bank of America Corp. (BAC + $0.29 to $39.20), Costco Wholesale Corp. (COST + $13.31 to $800.35), Elevance Health Inc. (ELV + $6.00 to $545.99)

Some unusual call activity (~5:1 calls over puts) is being seen in the KraneShares CSI China Internet ETF (KWEB + $0.70 to $32.03) as option traders primarily target the August 16^th 33.00 call. Volume on this contract is 102,134 (versus open interest of 8,560), which mostly consisted of three large block trades that took place at different times – a 20,000 contract was bought for $1.96 when the bid/ask spread was $1.93 x $1.97, a 20,000 contract block was bought at the ask price of $1.94 and a 20,000 contract block was bought at the ask price of $1.90. We know that all three of these block trades are new positions given the open interest figure and we can assume that intent is bullish in nature on all three blocks given where the trades took place within their respective bid/ask spreads.

Shares of Nice Ltd. (NICE - $31.69 to $196.40) are under pressure this morning, even though the provider of cloud platforms for AI-driven digital business solutions reported better-than-expected results in its most recent quarterly earnings release. The company reported Q1 earnings of $2.58 per share, excluding non-recurring items ($0.13 beat) on revenue that rose 15.3% year-over-year to $659.3M (above the $655.41M FactSet consensus estimate). Looking ahead, the company said that Q2 EPS is expected to come in a range of $2.53-2.63 on revenue that is expected to come in a range of $657-667M versus the respective $2.53 & $665.52M FactSet consensus estimates. Calls are outnumbering puts ~2:1 with the August 16^th 260.00 call being the highest volume contract (volume is 808).

Also trading to the downside this morning is Occidental Petroleum Corp. (OXY - $0.55 to $62.83) after Truist Securities downgraded the shale producer to "Hold" from "Buy" and cut their price target on the stock to $69.00 from $84.00. Analysts at Truist said OXY's recent acquisition of CrownRock will be less accretive versus other deals within the sector and believes shareholder returns will be minimal in upcoming quarters as the company uses the majority of free cash flows to reduce debt. Calls are outnumbering puts ~3:2 with the May 17^th 63.00 call leading the way (volume is 1,525).

New 52-week lows (42 new lows today): Exact Sciences Corp. (EXAS - $0.89 to $52.45), Green Plains Inc. (GPRE + $0.01 to $19.03), Under Armour (UAA - $0.02 to $6.78)

Some unusual put activity (~100:1 puts over calls) is being seen in the Global X Lithium & Battery Tech ETF (LIT + $0.28 to $45.20) which is primarily being driven by activity on the October 18^th 42.00 put. Volume on this contract is 3,000 (vs. open interest of 13), which included a 1,000 contract block that was bought at the ask price of $1.95. 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 at the ask price.

Globant S.A. (GLOB + $0.40 to $178.67): Option volume is running at ~24x the daily average on this provider of technology services which is primarily being driven by a couple of large blocks that were seen simultaneously trading on the June 21^st expiration earlier this morning:

• 165.00 put (open interest is 16): A 2,000 contract block was bought for $3.64 when the bid/ask spread was $2.75 x $3.90.
• 150.00 put (open interest is 5): A 2,000 contract block was sold for $0.95 when the bid/ask spread was $0.50 x $2.00.

We know that both of these blocks are new positions based on the respective open interest figures and it appears that a $15.00-wide bear put spread was established for a net debit of $2.69 (x 2K contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that GLOB will close below the break-even price of $162.31 at expiration.

Landstar Systems Inc. (LSTR + $0.05 to $185.07): Option volume is running at over 8x the daily average on this provider of integrated transportation management services which is primarily being driven by three fairly large blocks that were seen simultaneously trading on the June 21^st expiration earlier this morning:

• 200.00 call (open interest is 47): A 752 contract block was sold for $0.52 when the bid/ask spread was $0.40 x $0.65.
• 185.00 put (open interest is 0): A 752 contract block was bought for $4.16 when the bid/ask spread was $3.80 x $4.40.
• 175.00 put (open interest is 0): A 752 contract block was sold for $1.14 when the bid/ask spread was $1.00 x $1.30.

We know that all of these blocks are new positions based on the respective open interest figures and it appears that a (bearish) risk reversal put spread was established for a net debit of $2.50 (x 752 contracts x 100 multiplier, excluding commissions). The positioning suggests that the block trader believes that LSTR will close below the break-even price of $182.50 at expiration.

Bridgebio Pharma Inc. (BBIO + $0.70 to $30.67): A 2,000 contract block was sold on the August 16^th 30.00 put for $4.60 when the bid/ask spread was $4.10 x $6.00 (open interest is 654). 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 BBIO will remain above the $30.00 price level and/or is comfortable taking a long 200,000 share position in the stock at an effective purchase price of $25.40 in the event that BBIO closes below $30.00 at expiration.

The Cboe Volatility Index (VIX + 0.07 to 12.52) has been on both sides of the unchanged line today (the intraday is 12.33-12.58) as equity markets are mixed around the mid-day mark (DJI + 31, SPX - 1, COMPX - 15). VIX option volume has been above average at 927,154 contracts, which puts the index at the #6 spot on the “Top Volume by Underlying” list. The volume put/call ratio is currently 0.39 with the highest volume contract being the July 17^th 18.00 call (volume is 75,819 vs. open interest of 100,917).