U.S. stocks are lower as the markets continue to digest earnings data and last night's State of the Union Address from President Joe Biden. Meanwhile, yesterday's commentary from Fed Chairman Jerome Powell remains in focus after he acknowledged that inflation pressures are coming down but more needs to be done to finish to job. Earnings season continues to roll on, with Chipotle Mexican Grill missing estimates, but Uber Technologies topped quarterly expectations and issued a positive outlook, and Yum! Brands also bested the Street's projections. Outside earnings, Activision Blizzard is falling as U.K. regulators are challenging Dow member Microsoft Corporation's near $69 billion takeover agreement of the gaming company. The economic calendar is relatively light, but mortgage applications rebounded last week, and after the opening bell wholesale inventories ticked higher. Treasury yields are modestly moving to the upside, and the U.S. dollar is little changed. Crude oil prices are nudging higher and gold is dipping. Asia finished mixed and Europe is trading to the upside with the markets continuing to grapple with monetary policy uncertainty.
At 10:45 a.m. ET, the Dow Jones Industrial Average is down 0.2%, the S&P 500 Index is declining 0.6%, and the Nasdaq Composite is falling 1.0%. WTI crude oil is climbing $0.14 to $77.28 per barrel, and Brent crude oil is gaining $0.34 at $84.03 per barrel. The gold spot price is trading $1.80 lower to $1,883.00 per ounce, and the Dollar Index is little changed at 103.47. Natural Gas prices have traded in a range of $2.488-2.657 and were last seen trading lower by $0.07 (or - 2.71%) to $2.514/MMBtu.
Source: Schwab Center for Financial Research
Today’s Bullish Activity
Leading the point gainers list this morning is Inspire Medical Systems Inc. (INSP + $20.48 to $270.06) after the medical technology company reported Q4 earnings of $0.10 per share ($0.64 beat) on revenue that rose 75.9% year-over-year (YoY) to $137.9M (slightly above the $137.75M consensus estimate). Looking ahead, the company said that full-year 2023 (FY23) revenue is expected to come in a range of $560-570M (above the $545.71M expected) with FY23 gross margin expected to come in a range of 83-85%. Puts are outnumbering calls ~3:1 with the February 17th 240.00 put being the highest volume contract (volume is 171).
Also trading to the upside is New Relic Inc. (NEWR + $15.17 to $79.75) after the all-in-one observability platform for engineers reported fiscal Q3 earnings of $0.32 per share, excluding non-recurring items ($0.17 beat) on revenue that rose 17.8% year-over-year to $239.76M (above the $232.92M consensus estimate). In terms of guidance, the company said that Q4 EPS is expected to come in a range of $0.20-0.23 on revenue that is expected to come in a range of $240-242M, which is above the respective $0.15 & $239.74M consensus estimates. Calls are outnumbering puts ~3:1 with the February 17th 85.00 call seeing the most action from traders (volume is 532).
New 52-week highs (48 new highs today): CDW Corp. (CDW + $2.23 to $201.52), Eaton Corp. (ETN + $0.93 to $165.42), Transdigm Group Inc. (TDG + $10.92 to $753.42)
Notable Call Activity
Some unusual call activity (~4:1 over puts) is being seen in Phillips 66 Inc. (PSX - $0.52 to $101.76) as option traders primarily target the March 17th 110.00 call. Volume on this contract is 5,821 versus open interest of 444, so we know that the volume primarily represents new positioning. The bulk of the transactions on this contract consisted of various-sized blocks that were being bought at various times for between $1.00-1.20 each, which suggests bullish intent.
Today’s Bearish Activity
Gapping down to a three-month low this morning is Capri Holdings Ltd. (CPRI - $16.73 to $49.63) after the maker of luxury goods reported fiscal Q3 earnings of $1.84 per share, excluding non-recurring items ($0.40 miss) on revenue that fell 6.0% YoY to $1.51B (below the $1.54B expected). Additionally, the company issued downside guidance as Q4 EPS is expected to come in a range of $0.90-0.95 on Q4 revenue that is expected to be ~$127.5B, which is below the respective $1.39 & $1.41B expected. Shares of CPRI are trading just below the 200-day Simple Moving Average of $49.78 at the time of this writing. Calls are outnumbering puts ~4:3 with the February 17th 50.00 call being the highest volume contract (volume is 4,167).
Also trading to the downside is Black Hills Corp. (BKH - $7.60 to $63.42) after the electric utilities firm reported Q4 adjusted EPS of $1.11 per share ($0.05 miss) on revenue of $791.40M (above the $427.46M expected). Looking ahead, the company lowered its FY23 EPS forecast to a range of $3.65-3.85 from a prior view of $4.00-4.20, which the company is attributing to natural gas price volatility, higher interest rates and inflationary pressures on expenses. Option volume is relatively light with the May 19th 55.00 put being the highest volume contract (volume is 60).
New 52-week lows (14 new lows today): BM Technologies Inc. (BMTX - $0.06 to $4.27), Revelation Biosciences Inc. (REVB - $0.49 to $6.16), Semler Scientific Inc. (SMLR - $1.41 to $21.85)
Notable Put Activity
Some unusual put activity (better than 11:1 over calls) is being seen in KB Home Inc. (KBH - $1.49 to $37.85) as option traders primarily target the March 17th 37.00 put. Volume on this contract is 19,823 versus open interest of 58, so it’s likely that nearly all of the volume represents fresh positioning. The bulk of the transactions on this contract consisted of multiple large-sized blocks (5,000, 2,550, 2450, 2,007, 1,993, etc.) that were being bought at various times for $1.04 each (the bid/ask spreads were $0.95 x $1.10, $0.90 x $1.05 & $1.00 x $1.05), which suggests bearish intent.
Volume Signals
Viking Therapeutics Inc. (VKTX - $0.35 to $9.61): Option volume is running at over 3x the daily average on this clinical-stage biopharmaceutical company which is primarily being driven by activity on the February 17th 11.00 call. Volume on this contract is 6,496 versus open interest of 1,116, so we know that the volume primarily represents new positioning. The bulk of the activity consisted of various-sized blocks that were being bought at various times at the ask prices of $0.25 & $0.30 each, which suggests bullish intent.
Quanta Services Inc. (PWR - $0.16 to $153.41): Option volume is running at over 3x the daily average on this provider of specialty contracting services which is primarily being driven by a 2,000 contract block that was bought on the March 17th 140.00 put for $1.80 when the bid/ask spread was $1.25 x $1.95 (open interest is 21). 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.
Lumen Technologies Inc. (LUMN - $1.11 to $3.88): Option volume is running at nearly 3x the daily average on this telecommunications company with the February 17th 4.50 put (volume is 62,474 vs. open interest of 61,550) and the December 19th 2025 3.00 put (volume is 20,012 vs. open interest of 20,000) topping the highest contract volume list. Nearly all of the volume on the December contract is being attributed to a 20,000 contract block that was bought for $0.74 when the bid/ask spread was $0.56 x $0.90. It’s likely that this block trade is a new (bearish) position given the expiration date, but we can’t be sure given the open interest figure. Shares of LUMN are trading ~22% lower this morning after reporting disappointing Q4 earnings/guidance.
Gauging Volatility
The Cboe Volatility Index (VIX + 1.21 to 19.87) has been on both sides of the unchanged line today (the intraday range is 18.55-20.12) as equity markets are lower around the mid-day mark (DJI - 206, SPX - 44, COMPX - 188). VIX option volume has been below average today as the index is currently missing from the “Top Volume by Underlying” list. The volume put/call ratio is currently 0.43 with the highest volume contract being the February 15th 25.00 call (volume is 12,130 vs. open interest of 206,039).
Interested in receiving notifications of intraday unusual option trades? Follow Schwab’s Managing Director of Trading & Derivatives Randy Frederick on Twitter @RandyAFrederick who will be tweeting unusual options trades as he sees them throughout the day.
© Charles Schwab
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