Latest news with #options
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an hour ago
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Array Technologies (ARRY) Just Flashed a Statistically Significant Reversal Signal for Options Traders
Unusual options activity represents a tricky subject, in large part because of the vagaries of its implications. Because options can be bought and sold — and therefore carry debit- or credit-based structures — it's difficult to say with absolute certainty what the underlying dynamics mean. There has to be an objective mechanism to better determine which ideas could be intriguing and which ones to avoid. Those who want to place a bold wager should put Array Technologies (ARRY) on their radar. More News from Barchart Option Volatility And Earnings Report For July 21 - 25 What Gamma Exposure is Saying About Alphabet Stock Ahead of Earnings Block Stock Spikes on S&P 500 Index Addition. Here's What Traders Need to Know. Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. As a provider of solar tracking solutions for the construction, development and operation of solar PV sites, Array stands on interesting ground. On one hand, the world is eagerly embracing clean and renewable energy and solar clearly fits into this narrative. But on the other hand, the Trump administration's policies don't exactly favor ARRY stock. Circumstances have not been particularly conducive for Array, with its equity losing nearly 4% on Monday. Over the past five sessions, ARRY stock is down roughly 10%. Conspicuously, since around mid-May, ARRY appears to have entered a consolidation phase. Still, one could make the argument that, counterintuitively, slowing momentum may eventually be a net positive for ARRY stock. Yesterday, total options volume for the security reached 6,810 contracts, representing a 74.48% lift over the trailing one-month average. However, 5,378 of these contracts were puts, yielding a put/call ratio of almost 3.76. Digging into options flow — which focuses exclusively on big block transactions likely placed by institutional investors — the screener revealed that net trade sentiment slipped to $287,500 below parity. Therefore, most of the puts were debit-based transactions, meaning that they technically represent 'direct' bets against ARRY stock. So, should this worry investors? Most of the puts appear to be for contracts expiring in January 2027. I'm not sure how that would pressure the market downward in the immediate future. In my view, these puts are insurance against volatility, which is very reasonable considering the high beta of 1.74. Plus, the more important point may be that the bad news could be baked in. Using Science to Justify a Long Position in ARRY Stock To say that investors have reflected the pessimism of Array's business (along with optimistic talking points) into the share price of ARRY stock is a reasonable assumption. However, the assertion is that ARRY is now favorably mispriced, that the bears have overextended themselves. This is an extraordinary claim and therefore requires extraordinary evidence. I will let you decide if I have met this criterion. Naturally, those who wish to extract the greatest possible rewards from ARRY stock should consider the options market. But because options have defined profitability thresholds that must be activated within a given time frame, they present a multi-dimensional risk profile. A trader must have a thesis which forecasts magnitude (y-axis) and time (x-axis). To achieve such a predictive model for ARRY stock, we must understand its pattern of intentionality. It's here that most analysts make the mistake of attempting to find patterns in the share price itself. This practice, I would argue, is too chaotic. Instead, it is far more helpful to compress this noise into market breadth or sequences of accumulative and distributive sessions. In effect, we are going to convert the messiness of price discovery into a financial Morse code. Through this code, we can identify recurring patterns and more importantly, how they transition from one behavioral state to another. Conducting this exercise for ARRY stock across rolling 10-week intervals gives us the following demand profile: L10 Category Sample Size Up Probability Baseline Probability Median Return if Up 2-8-D 11 63.64% 43.78% 8.02% 3-7-D 45 64.44% 43.78% 6.08% 3-7-U 6 66.67% 43.78% 8.52% 4-6-D 62 37.10% 43.78% 13.41% 4-6-U 22 9.09% 43.78% 6.59% 5-5-D 12 33.33% 43.78% 7.77% 5-5-U 17 35.29% 43.78% 5.48% 6-4-D 5 60.00% 43.78% 2.43% 6-4-U 20 45.00% 43.78% 7.88% 7-3-U 16 43.75% 43.78% 5.11% 8-2-U 2 50.00% 43.78% 1.02% In the trailing two months, ARRY stock is printing a 3-7-D sequence: three up weeks, seven down weeks, with a negative trajectory across the 10-week period. Ordinarily, this sequence should trigger bearish sentiments as the balance of distributive sessions far outweighs accumulative. However, in 64.44% of cases, the following week's price action results in upside, with a median return of 6.08%. Effectively, this is our alternative hypothesis, that a mispricing exists and that our odds of upside stands at a generous 64.44%. This contrasts with the null hypothesis, which is the assumption of no mispricing. Under this latter paradigm, the null hypothesis is 43.78% — this is the chance that a long position in ARRY stock will be profitable on any given week. Since the 3-7-D sequence tilts the odds favorably for the bullish speculator, an incentive exists to consider a debit-based options strategy. Taking a Shot on Array Technologies For ultra-aggressive speculators, the 6/8 bull call spread expiring Aug. 15 may be tempting. This transaction involves buying the $6 call and simultaneously selling the $8 call, for a net debit paid of $95 (the most that can be lost in the trade). Should ARRY stock rise through the short strike price ($8) at expiration, the maximum reward is $105, a payout of 110.53%. The breakeven price for the above trade is $6.95, which is an important detail. Based on past analogs, the expected price target is around $7.28. Therefore, ARRY stock will require an above-average performance to hit the $8 strike price. Those interested in a much more probabilistic transaction may consider the 6/7 bull spread. However, this trade features a maximum payout of only around 54%. One of the key questions regarding the above strategy is the statistical viability of the 3-7-D sequence. Running a one-tailed binomial test reveals a p-value of 0.0039, translating to a 99.61% confidence level that this signal is 'intentional' rather than random. This also more than meets the scientific threshold of statistical significance, which stands at 95%. To be clear, a high confidence of non-randomness does not mean a higher probability of success. It just states that there is something about this balance of market demand that traders can potentially exploit. On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Sign in to access your portfolio
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15 hours ago
- Business
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NVDA Broken Wing Butterfly Trade Targets A Profit Zone Between 150 and 160
Nvidia (NVDA) is pulling back towards the rising 21-day moving average and is still in a solid uptrend. Today we're looking at a broken wing butterfly trade that creates a profit zone between $150 and $160 with income potential of around $85. Yesterday, the stock closed around $167. More News from Barchart Down 10% Since Warren Buffett's Retirement News, Should You Buy the Dip in Berkshire Hathaway Stock? Array Technologies (ARRY) Just Flashed a Statistically Significant Reversal Signal for Options Traders MSCI, the Index Company, Forecasts Strong Free Cash Flow, Looks Undervalued Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox. Sign Up Now! A broken wing butterfly with puts is a butterfly spread with long put strikes that are not at the same distance from the short put strike. A broken wing butterfly has more risk on one side of the spread than on the other. You can also think of it as a butterfly with a 'skipped strike'. The trade is usually set up as a slightly bullish trade. A broken wing butterfly with puts is usually created buying a put, selling two lower puts and buying one further out-of-the-money put. An ideal setup of the trade is to create the broken wing butterfly for a net credit, in this way, there is no risk on the upside. The main risk with the trade is a sharp move lower early in the trade. NVDA Broken Wing Butterfly Example On NVDA, an August 15 expiry broken wing butterfly could be set up through buying the $165 put, selling two of the $160 puts and buying the $150 put. Here are the details of the trade as of yesterday's close: Buy 1 August 15, $150 put @ 1.25 Sell 2 August 15, $160 put @ 3.10 Buy 1 August 15, $165 put @ 4.85 Notice that the upper strike put is 5 points away from the middle put and the lower put is 10 points away. This broken wing butterfly trade will result in a net credit of $10, which means that if NVDA stays above $165, the profit will be $10. On the downside, the maximum loss can be calculated by taking the difference between the two widths (5) multiplied by 100, minus the premium received. That gives us 5 x 100 - 10 = $490. The maximum gain can be calculated as 5 x 100 + 10 = $510 The ideal scenario for the trade is that NVDA stays above $160 for the next month. The main expiration profit zone is between $155 and $165. The trade starts with delta of 4, so has a slight bullish bias to start, but that will flip to slightly negative delta closer to expiry if NVDA is still above $165. In terms of risk management, I would set a stop loss of 20% of the capital at risk, or if NVDA broke below $155. This is what the trade looks like as of today: You can see the main risk in the trade is a drop in price early on. The blue line is the profit and loss at expiration and the purple line is the T+0 line. T+0 just means 'today'. So, we don't want the stock to get into the profit tent too early. What about in three weeks' time? How does the trade look then? Looking a pretty good at any price above $155. Summary This strategy should move fairly slowly unless there is a sharp drop in the stock price. You can do this on other stocks as well but remember to start small until you understand a bit more about how this all works. Mitigating Risk With any option trade, it's important to have a plan in place on how you will manage the trade if it moves against you. A stop loss of 20% might make sense in this scenario. If NVDA is below $160 near expiry, there will be assignment risk Please remember that options are risky, and investors can lose 100% of their investment. This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions. On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Sign in to access your portfolio
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2 days ago
- Business
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Mixing Applied Science with Unusual Options to Target an Opportunity in Samsara (IOT)
Here's a dirty little secret about unusual options screeners: every day, you're going to find securities that trigger the algorithm due to their aberrant transactions relative to prior trends. But that doesn't mean that every single idea on the list is worth a hoot. You got to find a way to mathematically pinpoint probabilistically enticing trades. Otherwise, you're going to be chasing noise. For those who are looking for an empirically compelling idea, Samsara (IOT) should be on your radar. In my column 'The Saturday Spread,' I mentioned that the fleet management and safety platform provider — which is one of the leaders in applied artificial intelligence — may have a realistic chance of moving higher due to a rare quantitative signal. More News from Barchart Option Volatility And Earnings Report For July 21 - 25 How to Make a 3.0% One-Month Yield By Shorting UBER Puts What Gamma Exposure is Saying About Alphabet Stock Ahead of Earnings Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now! We'll get to that point later. More recently, IOT stock was one of the highlights in Barchart's Unusual Stock Options Volume screener. On Friday, total options volume hit 9,562 contracts, representing a lift of 52.12% over the trailing one-month average. Call volume reached 8,531 contracts, with put volume down at 1,031 contracts, yielding a put/call ratio of 0.12. On the surface, this ratio seems bullish, implying that more trades are engaging calls than puts. However, options flow — which focuses exclusively on big block transactions likely placed by institutional investors — showed that net trade sentiment on the day slipped to $131,200 below parity, thus favoring the bears. Most of the calls? They were sold calls, otherwise known as credit-based transactions. In other words, traders were underwriting the risk that IOT stock would not rise to the profitability threshold, which is around $44.20 with an expiration date of Sep. 19, 2025. While the options flow data might seem discouraging at first, as adventurous speculators, we can still aim for profitability below the aforementioned implied ceiling. Using Math to Formulate a Strategy for IOT Stock In any real analysis, the study must disclose a null hypothesis. Regarding the equities sector, the null hypothesis is the assumption that there is no mispricing. In other words, whether you read this article on IOT stock or not, your performance will not deviate from expected norms. Therefore, our job as analysts is to reject the null — that is, present an investment or trading idea that has a higher-than-random chance of generating alpha. In this case, I have defined my null hypothesis as the baseline probability of IOT stock rising over a one-week period, which is 52.66% (from January 2019 onward). So, my alternative hypothesis must reliably beat this performance stat; otherwise, there would be absolutely no point in writing this article. Luckily, I'm not in the business of wasting my own time. To deliver an empirical, falsifiable signal, though, I cannot use the continuous scalar signal of the stock price. Instead, I prefer to compress (discretize) price action into market breadth or sequences of accumulative and distributive sessions. Through this approach, I'm able to analyze root demand — at the end of the session, was the market a net buyer or net seller? By conducting the above exercise across rolling 10-week intervals, I was able to categorize Samsara's demand profile as below: L10 Category Sample Size Up Probability Baseline Probability Median Return if Up 2-8-D 2 50.00% 52.41% 5.32% 3-7-D 11 54.55% 52.41% 7.00% 3-7-U 2 0.00% 52.41% N/A 4-6-D 23 65.22% 52.41% 6.21% 4-6-U 5 80.00% 52.41% 11.61% 5-5-D 26 61.54% 52.41% 6.37% 5-5-U 20 60.00% 52.41% 4.27% 6-4-D 11 45.45% 52.41% 7.11% 6-4-U 42 42.86% 52.41% 5.19% 7-3-D 1 0.00% 52.41% N/A 7-3-U 19 57.89% 52.41% 6.08% 8-2-U 4 25.00% 52.41% 19.07% 9-1-U 1 0.00% 52.41% N/A In the past two months, IOT stock flashed a 4-6-D sequence: four up weeks, six down weeks, with a negative trajectory across the 10-week period. Ordinarily, with the balance of distributive sessions outweighing accumulative, you would expect the bears to dominate proceedings. However, the 4-6-D historically represents a sentiment reversal. In 65.22% of cases, the following week's price action results in upside, with a median return of 6.21%. Should the bulls maintain control for a second week, the median performance is an additional 3.75%. Theoretically, with IOT stock closing at $39.24, it could be poised to exceed the $43 level over the next few weeks. Interestingly, last week, IOT also flashed the 4-6-D sequence and from Friday, the trailing five-day performance was 5.03%. It's possible, then, that there could be something cooking here. Taking What the Market Will Give Us At this moment, arguably the most tempting idea is the 40/41 bull call spread expiring Aug. 15. This transaction involves buying the $40 call and simultaneously selling the $41 call, for a net debit paid of $50 (the most that can be lost in the trade). Should IOT stock rise through the short strike price ($41) at expiration, the maximum reward is also $50, a 100% payout. Now, the question may be, how trustworthy is the 4-6-D sequence? With the market being an open system, anything can happen, which adds complexity to any transaction. However, running a one-tailed binomial test, the aforementioned sequence generates a p-value of 0.1594. Colloquially, this means that there's an 84.06% confidence level that the signal is not merely noise. To be sure, 84.06% would not be considered statistically significant, with science requiring a threshold of 95%. But science deals with closed systems, not open ones like the equities arena. In context, I would argue that the 4-6-D sequence is empirically intriguing. With the high payout and low debit required, it might be worth consideration. On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. 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3 days ago
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Franklin Templeton Adds Managed Options Strategies to its Custom Indexing Platform, Canvas
Further strengthens Canvas as a leading platform for personalized and tax-managed investment solutions SAN MATEO, Calif., July 21, 2025--(BUSINESS WIRE)--Franklin Resources, Inc. [NYSE:BEN], a global investment management organization operating as Franklin Templeton, today announced the addition of managed options strategies to its custom indexing platform, Canvas. This latest enhancement will provide financial advisors a single account solution to implement options programs that add risk-management guardrails, target income generation, and/or diversify away from concentrated stock risk. The new strategies will be managed by the Franklin Managed Options Strategies Team (MOST), pioneers in the "risk-managed" options business with over 30 years of options investing experience. "The introduction of managed options strategies on Canvas reflects Franklin Templeton's continued commitment to bringing innovative, customized investment and practice management solutions to financial advisors," said Roger Paradiso, Head of Franklin Templeton Custom Client Solutions. "This development enhances advisors' ability to build custom, tax-managed SMAs that address specific client needs, and reinforces Franklin Templeton's continued leadership in the fast-growing SMA industry, bolstered by the rapid expansion of direct and custom indexing." Drawing on the fundamentals of direct indexing, Canvas is an end-to-end multi-asset investment platform for advisors to easily automate tax management, simplify portfolio transitions, and personalize and manage accounts at scale. Over the past year its asset allocation choices have significantly expanded to include fundamental active equity strategies, municipal bonds, and active fixed income strategies, building on its core passive, factor, and custom indexing capabilities. "We are excited about the added benefits options bring to custom indexing," said Jon Orseck, Co-CIO of Franklin MOST. "Beyond their complementary benefits from an investment perspective, both managed options and custom indexing aim to provide investors greater control and transparency. By unifying them within a single account on Canvas, advisors gain enhanced tax and operational efficiency that ultimately can help to deliver a better client experience." Franklin Templeton is a leading provider in the SMA industry, with approximately $155 billion in SMA assets under management as of June 30, 2025, strengthened by the year-over-year growth of its Canvas platform, which accounts for $13.8 billion. About Franklin Templeton Franklin Resources, Inc. [NYSE: BEN] is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 150 countries. Franklin Templeton's mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the company offers specialization on a global scale, bringing extensive capabilities in fixed income, equity, alternatives, and multi-asset solutions. With more than 1,500 investment professionals, and offices in major financial markets around the world, the California-based company has over 75 years of investment experience and $1.6 trillion in assets under management as of June 30, 2025. For more information, please visit and follow us on LinkedIn, X and Facebook. Copyright © 2025. Franklin Templeton. All rights reserved. O'Shaughnessy Asset Management, LLC and Franklin Managed Options Strategies, LLC are Franklin Templeton affiliated companies. WHAT ARE THE RISKS? All investments involve risks, including possible loss of principal. Tax management practices may impact performance, portfolio characteristics and holdings; and may not result in favorable outcomes. IMPORTANT INFORMATION CANVAS® is an interactive web-based investment tool developed by O'Shaughnessy Asset Management, L.L.C. ("OSAM") that permits an investment professional to select a desired investment strategy for the professional's client. At all times, the investment professional, and not OSAM, is responsible for determining the initial and ongoing suitability of any investment strategy for the investment professional's underlying client. The professional's client shall not rely on OSAM for any such initial or subsequent review or determination. Rather, to the contrary, at all times the professional shall remain exclusively responsible for same. Franklin Templeton, its affiliates, and its employees are not in the business of providing tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties or complying with any applicable tax laws or regulations. Tax related statements, if any, may have been written in connection with the "promotion or marketing" of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. View source version on Contacts Franklin Templeton Corporate Communications:Rebecca Radosevich, (212) 632-3207,
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3 days ago
- Business
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Option Volatility And Earnings Report For July 21
It's a pivotal week for earnings this week with some big names set to report including Tesla (TSLA), Alphabet (GOOGL), Intel (INTC), Verizon (VZ), Freeport McMoran (FCX) and Newmont Mining (NEM). Before a company reports earnings, implied volatility is usually high because the market is unsure about the outcome of the report. Speculators and hedgers create huge demand for the company's options which increases the implied volatility, and therefore, the price of options. More News from Barchart How to Make a 3.0% One-Month Yield By Shorting UBER Puts Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. After the earnings announcement, implied volatility usually drops back down to normal levels. Let's take a look at the expected range for these stocks. To calculate the expected range, look up the option chain and add together the price of the at-the-money put option and the at-the-money call option. Use the first expiry date after the earnings date. While this approach is not as accurate as a detailed calculation, it does serve as a reasonably accurate estimate. Monday VZ – 3.7% Tuesday KO – 2.8% GM – 5.9% RTX – 4.2% HAL – 5.5% COF – 4.9% LMT – 4.6% Wednesday TSLA – 7.4% GOOGL – 6.0% CSX – 3.4% FCX – 4.7% CMG – 7.1% NEE – 4.2% T – 4.8% LUV – 6.3% IBM – 6.9% LVS – 5.2% Thursday INTC – 8.2% NEM – 6.2% BX – 4.6% MBLY – 10.4% HON – 4.0% Friday Nothing of note Option traders can use these expected moves to structure trades. Bearish traders can look at selling bear call spreads outside the expected range. Bullish traders can sell bull put spreads outside the expected range, or look at naked puts for those with a higher risk tolerance. Neutral traders can look at iron condors. When trading iron condors over earnings, it is best to keep the short strikes outside the expected range. When trading options over earnings, it is best to stick to risk defined strategies and keep position size small. If the stock makes a larger than expected move and the trade suffers a full loss, it should not have more than a 1-3% effect on your portfolio. Stocks With High Implied Volatility We can use Barchart's Stock Screener to find other stocks with high implied volatility. Let's run the stock screener with the following filters: Total call volume: Greater than 5,000 Market Cap: Greater than 40 billion IV Percentile: Greater than 80% This screener produces the following results sorted by IV Percentile. You can refer to this article for details of how to find option trades for this earnings season. Last Week's Earnings Moves FAST +4.2% vs 5.5% expected JPM -0.7% vs 3.7% expected WFC -5.5% vs 4.6% expected C +3.7% vs 4.3% expected JNJ +6.2% vs 2.7% expected BAC -0.3% vs 4.2% expected ASML -8.3% vs 6.1% expected MS -1.3% vs 4.2% expected GS +0.9% vs 4.1% expected PGR +1.8% vs 3.9% expected KMI -1.5% vs 3.5% expected TSM +3.4% vs 5.3% expected NFLX -5.1% vs 7.6% expected ABT -8.5% vs 3.5% expected PEP +7.5% vs 4.0% expected IBKR +7.8% vs 5.5% expected USB -1.0% vs 3.9% expected AXP -2.4% vs 4.5% expected SCHW +2.9% vs .8% expected MMM -3.7% vs 5.5% expected TFC -1.7% vs 3.7% expected SLB -3.9% vs 5.0% expected Overall, there were 16 out of 22 that stayed within the expected range. Unusual Options Activity TSLA, XOM, IBKR, XOM, COIN and HOOD and all experienced unusual options activity last week. Other stocks with unusual options activity are shown below: Please remember that options are risky, and investors can lose 100% of their investment. This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions. On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Sign in to access your portfolio
