We are heading into a high stakes week for tech earnings and it's not just some video options.
Markets are pricing in massive moves for Salesforce and Marvel Tech at the same time, elevated bond yields as well as some very seasonal trends are adding renewed macro pressure across the equity averages.
But we are seeing yields pull back slightly this morning on the news that the massive $950 billion Treasury general account can be used.
To fund the government's long term debt buybacks and this is according to a report by CNBC.
Meanwhile, with Marvell striking a $12 billion warrant deal with Google ahead of Thursday's earnings and sales force facing a make or break 7% earnings swing on Wednesday.
Traders are hunting for directional signals in the options here to break down options flow as well as earnings volatility and positioning is Bob Lang chief options strategist at.
Explosive options.
Bob, good morning.
Happy Monday.
Thank you so much for joining me.
So first and foremost, there is a lot of anticipation as we head into this week.
Of course we get Besson speaking later today at 2 p.m.
Eastern and we have invidia, not to mention other tech earnings, but how are options traders using index puts and calls right now to hedge against the macro headwinds as well as potential hawkish pressures coming from Fetcher.
Well, good morning, Remy.
So I, I think that uh we're, we're seeing some really good action in, uh in, in options flow from Marvell and Salesforce which really kind of caught my eye last week.
Um, for instance, on the Marvell, we're talking about the September 2:20 calls, which were pretty active, uh, and they just basically went slightly out of the money early this morning, or right at the money.
So, I, I think they offer a really attractive return here, especially if earnings are, are taken positively on Thursday after the close.
Um, I'm also seeing some good positive action in the October 250 calls.
Uh, last week, there were some, uh, some, some heavy volume on That strike, we've seen some, also some put selling going on, which is bullish for, uh, for Marvel, uh, out into, uh, December and January leaps.
We're seeing some 300 puts.
So, somebody is really looking for a, a strong move up for Marvell into the end of the year, at least about uh 30% to the, to the end of the year.
So that's, that's a, that, that's a really positive development for, for Marvell, Certainly if the market takes their earnings positively.
And speaking of which Marvell has been in the spotlight after granting Google over $12 billion and warrants tied to chip purchases.
But of course the underlying concern when it comes to the AII trade is circular demand.
So when it comes to what you're seeing with institutional buying with Marbell, tell us what's happening below the surface here.
Well, below the surface, uh, Remy, we're, we're seeing a lot of, uh, stock buying in Marvell and have seen that for the past 7 months.
Uh, the volume, uh, trends have been fairly positive.
Just more recently, they did go negative, uh, when, when a lot of these, uh, semiconductor stocks underwent a, a, a very sharp correction.
And Marvell has, uh, obviously, one of the, uh, one of the big names that, uh, participated in that correction, correctional, uh, period.
So, I, I think that, um, you know, the, the stock came down.
Quite a bit from the recent highs, and uh it has corrected enough, it uh hit a Fibonacci level that I was watching a key level, uh, recently.
And, uh, I, I think that once it bounces off that level and kind of goes steadier sideways for, you know, a, a matter of, uh, of weeks over here, uh, we should see the stock turn right back up again, create a higher high on the chart and a higher low, and, uh, may, maybe make a move to that 300 level where the, uh, put sellers were, were pretty active in the last couple of weeks.
Yeah, and I do want to get your perspective on timing when it comes to Marvel.
So the company does report Thursday and this does come after a highly volatile week as well as Monday for chip stocks out there.
So what is implied volatility pricing again and also tell us what you think it might be the most efficient option structure to trade it.
Well, the implied volatility is, is looking for about an 8.5% move, which is a little bit higher than normal for, for Marvell.
Um, so, I think the anticipation that the stock is going to turn it around is pretty high right now.
It's pretty, uh, pretty strong move, uh, for 8.5, maybe 10%.
But, uh, certainly, uh, there's a lot of people who have been piling into the stock more recently and have gotten burned because the stock came down and, and, and corrected with the rest of, uh, of, of semiconductor stocks.
But I, I think in anticipation of that move, uh, I, I do think the stock is poised and ready for a large move.
I'm not sure which direction it's gonna be.
Again, the options players are telling us that it's probably gonna be up.
And, uh, if, if it gets to move past, uh, last week's high, when it announced that news with, uh, with Google, uh, if they get past uh last week's high, about 250 to 253, um, I think it's off to the races for Marbell.
Yeah, and Bob, of course, while I have you here, I do want to get your take on Salesforce.
So Salesforce will be reporting on Wednesday, and it does have competition when it comes to earnings because Nvidia will also be reporting as well.
But when it comes to this name, tell us what traders are betting on and what can we potentially see as we head into earnings on Wednesday afternoon.
Remy, seeing some really good action in the September 200 calls more recently.
Last week, quite a few of those, uh, calls were bought, um, outright, and even as the stock was moving higher, um, it shows a lot of confidence and a lot of, uh, uh, positiveness going into, uh, going to earnings, which are gonna be coming out Wednesday night after the close.
We've also seen some heavy action in the January leaps, which is, uh, for 2027.
Those are Longer-term options, but it's, it's not, uh, quite unusual to see, um, this late stage of the year to see some of that, uh, action coming in on, on those, on those leaps.
But 2:30 calls for 2027 is quite interesting.
So the stock is about uh a little over 10% away from that, uh, from that strike.
So, uh, some, some investors and traders here are believing that the stock is gonna make, probably make a really big move up to those recent highs about 295 from the beginning of the year.
I'll tell you this, you know, the Salesforce being one of those names that was kind of the poster child for getting beaten up from the software companies, along with, uh, you know, Microsoft, along with Oracle and, and so Workday and, and Dataog and some of these other names that were really hit hard from the spring.
But this stock has made a really nice comeback cause it Beautiful technical pattern over here.
Recently went above the 200 day moving average, which is a big deal for a big institutional investors.
So, um, they tend to surprise both directions on the upside or the downside.
Um, it's been a while since they've, uh, uh, had a positive response to earnings.
It's been, uh, at least since early 2025.
So, um, it's, it's very good, uh, very good to see that the chart is, uh, is showing some confidence from investors and traders over here.
So, I think the stock could make a move, uh, later in the week.
Yeah, and Bob, before I let you go, we have a little over 60 seconds here, and as you mentioned, some analysts do expect a second half recovery for sales force, especially on the heels of that disruption due to AI.
But where do you see the best risk reward for options traders this week?
Is it buying calls on semi.
Utility or would you say playing a potential dip rebound in software?
Well, I, as far as the, uh, software is concerned, I think the IGV is one, the ETF that, uh, that is really, uh, struck me as, uh, is, is quite interesting here.
But if you're gonna go with Salesforce, I think probably the best way to go here, Remy, is to do a, a call spread.
And maybe buying at the money call spread like the 200 call for September, possibly October, selling the 250 call.
So a wide $50 spread, that's about 40% of the price of the stock.
Still, you're gonna get some action from the, uh, from the earnings, the volatility.
Um, the market is looking for about a 7.5%. percent move on, on, uh, uh, Salesforce.
And I think that if it makes that move, and again, it's taken positively, it gets above the highest from last week, I think, uh, it's good, it's good to go, at least to get up to that 250 level.
That would be a big move for a, uh, a, a mega cap stock like, uh, like Salesforce, but I still think that, uh, um, you get more bang for your buck by, uh, by putting in a, in a widespread like that from 200 to 250 for, say, September or October.
Well, Bob, a lot of levels to keep our eyes on as we head into those earnings.
So I appreciate you joining us on this Monday morning.
And as always, thank you so much for sharing all of your insights.
Great to be with you, Brey.
Thank you for having me.
