Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Jul 3, 2025 at 11:13 AM
Updated on Jul 8, 2025 at 9:47 AM
  • Best and Worst Stocks

After a stellar end to the second quarter, investors may be reassessing their portfolios. Schaeffer’s Senior Quantitative Analyst Rocky White's list of 25 worst S&P 500 Index (SPX) stocks for July is a great tool to avoid any potential fallacies. Below, let's dig deeper into Coterra Energy Inc (NYSE:CTRA), which is one of the worst energy names to own this month.

According to White's data, CTRA averaged a 1.5% loss in July over the last decade, settling higher only twice during that period. The equity is also one of six oil, gas, and coal names on the list. 

Worst July 2025 2

Coterra Energy stock was last seen 0.6% higher to trade at $25.19, but yesterday marked a sixth-straight loss, just had its worst its worst quarter since September 2019, and only scored three monthly wins in 2025. The shares also carry modest year-to-date and year-over-year losses, and are now trading below several key long- and short-term moving averages.

CTRA Intraday

An unwinding of optimism in the options pits could pressure CTRA further. The stock's 10-day call/put volume ratio of 12.31 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 93% of readings from the past year. 

Published on Jul 8, 2025 at 9:03 AM
  • Opening View
 
Published on Jul 7, 2025 at 4:26 PM
  • Market Recap
   
Published on Jul 7, 2025 at 3:12 PM
  • Technical Analysis
  • Quantitative Analysis

The week kicked off with more tariff updates and threats, specifically against those who align with what President Donald Trump dubbed "Anti-American" policies from the Brazil, Russia, India, China, and South Africa (BRICS) bloc. Below, let's take a look at how artificial intelligence (AI) names are faring amid the market turmoil. 

CoreWeave Inc (NASDAQ:CRWV) stock is down 4.1% at $158.50 at last check, as it continues to fail to conquer the $160 level, though it still sports an over 218% three-month lead. Earlier today, news broke that the company will purchase crypto miner Core Scientific (CORZ) for $9 billion. CRWV began trading in late March with an initial public offering (IPO) of $40.

Also swimming in red ink is C3.ai Inc (NYSE:AI) stock, off 1.2% to trade at $25.44 at last glance. Despite a recent pivot higher, AI is once again pulling back to the ascending 50-day moving average. And while the tech stock remains 46% above its April bottom of $17.03, it now sports a year-to-date loss of 26%.

SoundHound AI Inc (NASDAQ:SOUN) stock is faring much better, last seen up 2.6% to trade at $11.38. SOUN sports a 170% year-over-year lead and could today nab its highest close since late May. Plus, the $9 region has been a solid level of support over the last few months.

Published on Jul 7, 2025 at 2:56 PM
  • Quantitative Analysis

Alibaba Group Holding Ltd (NYSE:BABA) shares are 2% lower to trade at $106.55 at last glance, sliding alongside the broader market amid tariff uncertainty. Despite today being on track for its third-straight loss, the equity still sports a 26.8% lead for 2025, with a familiar floor at the $100 level ready to contain any additional losses. Even better, the stock is now trading a trendline that has historically resulted in bullish returns.

According to Schaeffer's Senior Quantitative Analyst Rocky White, BABA is within one standard deviation of its 200-day moving average. Shares were above this this trendline in at least eight of the last 10 trading days, and spent 80% of the past two months above it. Within these parameters, three other signals occurred during the last five years, after which the equity was higher one month later 67% of the time, averaging a 6.9% gain.

BABA 200 Day

For those looking to weigh in on the stock's next moves, options look like an affordable route. This is per BABA's Schaeffer's Volatility Index (SVI) of 32%, which sits in the 8th percentile of its annual range. This indicates options traders are pricing in low volatility expectations.

It's also worth noting that Alibaba stock has usually outperformed these expectations during the past year, per its Schaeffer's Volatility Scorecard (SVS) of 87 out of 100. 

Published on Jul 7, 2025 at 2:24 PM
  • Most Active Options Update

Tesla Inc (NASDAQ:TSLA) is swimming in red ink today, last seen down 7.3% to trade at $292.16. Just when it appeared CEO Elon Musk was returning to focus on his electric vehicle (EV) company, he announced over the weekend intentions to form a new political party. Right on cue, William Blair downgraded TSLA to "market perform," while short sellers collected $1.4 billion in paper profit at last check.

Prior to today's gap lower, TSLA had been seeing a surge in options activity. The equity landed on Senior Quantitative Analyst Rocky White's list of equities with the highest options volume over the past two weeks. In the last 10 sessions, the stock has seen 14,175,441 calls and 11,807,911  puts exchanged, the second-most active stock behind Nvidia (NVDA). The most popular contract during this time frame has been the weekly 6/27 320-strike put and the 330 call in the same series. 

MAO July 7

TSLA is staring down a 27.6% year-to-date deficit, and today's price action is testing its 80-day moving average. The shares remain up 17.2% year-over-year, though the 16 of the 41 brokerages in covering maintaining "buy" or better ratings could be headwind going forward, should more analysts change their tune.

TSLA Stock Chart July

Puts are growing in popularity. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OM X PHLX (PHLX), TSLA's 10-day put/call volume ratio ranks in the 78th percentile of annual readings. Echoing this, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.09 stands in the 90th percentile of readings from the past 12 months. 

Premium is affordably priced, per the stock's Schaeffer's Volatility Index (SVI) of 48% that ranks in the 5th percentile of its annual range, implying that options players are pricing in lower-than-usual volatility expectations. Plus, the security's Schaeffer's Volatility Scorecard (SVS) sits at a 83 out of 100, it tended to exceed volatility expectations during the past year.

Published on Jul 7, 2025 at 11:53 AM
  • Midday Market Check

Published on Jul 7, 2025 at 11:34 AM
  • Strategies and Concepts

An Inside Look at How Options Trading Really Works

by Schaeffer's Digital Content Team

Options are versatile financial instruments that offer traders and investors a unique way to engage with the markets. Whether you're looking to amplify gains, hedge against potential losses, or generate steady income, options can be a powerful tool when used wisely. However, navigating the world of options requires a solid understanding of their mechanics, especially the differing roles and responsibilities of premium buyers and premium sellers.

For buyers, options provide the right, but not the obligation, to buy or sell an underlying asset at a specified price within a set timeframe. This allows for significant leverage with limited risk, as the maximum potential loss is confined to the premium paid for the contract. In contrast, sellers take on the obligation to fulfill the terms of the contract if exercised, receiving the premium as immediate compensation but assuming potentially substantial risks depending on the strategy employed.

This guide breaks down how options work from both perspectives, exploring the mechanics, opportunities, and risks involved for buyers and sellers. By understanding the dynamics of options trading, you’ll be better equipped to make informed decisions and tailor strategies to your financial goals and risk tolerance.

Whether you're a seasoned trader or a newcomer to derivatives, this article will demystify the complexities of options and show how these contracts can be leveraged effectively in a variety of market conditions.

How Options Buying Works

Options buying, also known as premium buying, involves purchasing an options contract, which grants the trader the right, but not the obligation, to buy or sell an underlying asset at a predetermined strike price before the contract expires. To initiate the process, the trader pays a premium—the cost of the option—to the seller. This premium represents the trader's upfront cost and maximum potential loss if the trade does not go as planned.

After purchasing the option, the trader monitors the price of the underlying asset, hoping it will move favorably. For call options, the trader benefits if the price of the underlying asset rises above the strike price, while for put options, the trader profits if the price falls below the strike price. The goal is for the option's intrinsic value, or its premium, to increase due to changes in the asset price, implied volatility, or time remaining until expiration.

If the market moves as anticipated, the trader has several choices. The trader can sell the option on the open market, locking in a profit by capitalizing on the increased premium. Alternatively, the trader can exercise the option to buy (for a call) or sell (for a put) the underlying asset at the favorable strike price. However, if the market moves against them or the asset's price remains stagnant, the option may lose value and could ultimately expire worthless. In this scenario, the trader loses the premium paid for the option, which serves as the cost of the unsuccessful trade.

Traders also have the flexibility to sell their option contracts before expiration, even if they do not plan to exercise the option. This strategy allows them to capture profits or mitigate losses based on changes in the option's market value over time. Understanding the dynamics of options pricing, such as time decay and volatility, is crucial for managing risks and maximizing returns in options trading.

How Options Selling Works

Options selling, also known as writing options, involves creating and selling an options contract to a buyer in exchange for a premium. This premium represents the seller's immediate profit and serves as compensation for taking on the obligation associated with the option. When selling an option, the seller does not have the right to buy or sell the underlying asset but is obligated to fulfill the terms of the contract if the buyer exercises the option.

After selling the option, the seller's objective is for the contract to expire worthless. This occurs when the market price of the underlying asset does not move significantly enough to make the option valuable to the buyer. For a call option, this means the underlying asset’s price remains below the strike price at expiration, while for a put option, the price must remain above the strike price. In such cases, the option expires unexercised, and the seller keeps the entire premium as profit.

However, if the market moves unfavorably for the seller, they may face substantial risks. For a sold call option, the seller might need to sell the underlying asset at the strike price if the buyer exercises the option, which can result in losses if the asset's market price exceeds the strike price. Similarly, for a sold put option, the seller may be obligated to purchase the underlying asset at the strike price, potentially incurring losses if the market price is below the strike price.

Unlike option buyers, option sellers do not benefit from the leverage of price movement. Their maximum profit is limited to the premium received when the option was sold, while their potential losses can be theoretically unlimited for uncovered (naked) calls or substantial for uncovered puts. Sellers can reduce risk by employing strategies like covered calls, where they own the underlying asset, or cash-secured puts, where they hold enough cash to purchase the asset if assigned.

Throughout the life of the option, the seller can also buy back the contract before expiration, closing the position. This can help lock in profits or limit losses if the market conditions become unfavorable. Successful options selling requires a deep understanding of market conditions, options pricing dynamics, and risk management to balance the limited profit potential against significant downside risks.

The Bottom Line

Understanding how options work for both option buyers and option sellers is key to unlocking their potential in your trading portfolio. Options offer a flexible way to profit from market movements, hedge existing positions, or generate income, but they come with distinct risks and rewards depending on the role you take. Buyers benefit from the ability to control substantial market positions with limited risk, while sellers capitalize on consistent premiums but must manage significant downside exposure.

By mastering the mechanics of options, appreciating their risks, and employing sound risk management, you can integrate these versatile tools into your financial plan and navigate the complexities of the options market with confidence.

Published on Jul 7, 2025 at 9:12 AM
Updated on Jul 7, 2025 at 11:19 AM
  • Opening View
 
Published on Jul 7, 2025 at 10:26 AM
  • Buzz Stocks
  • Analyst Update

Shares of MGM Resorts International (NYSE:MGM) are down 1.5% to trade at $37.04 at last check, after Goldman Sachs coverage initiated coverage with a "sell" rating and $34 price target. The analyst in question noted the company's free-cash-flow generation could ding both capital returns and valuation.

MGM shed 15% in the last 12 months, but still maintains a 5.2% lead for 2025, with support from the 20-day moving average. The security is fresh off its third-straight weekly gain that finally cleared its 200-day moving average, a trendline that capped rallies in May and was last toppled in February. 

The equity's 10-day call/put volume ratio of 6.76 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 94% of annual readings. An unwinding of this optimism may pressure MGM Resorts International stock even lower.

Premium is affordably priced, per MGM's Schaeffer's Volatility Index (SVI) of 33% that sits in the 10th percentile of its annual range, implying options players are pricing in lower-than-usual volatility expectations. Its Schaeffer's Volatility Scorecard (SVS) of 83 out of 100 is also worth noting, as it suggests the stock tended to exceed those volatility expectations in the past year.

Published on Jul 7, 2025 at 9:34 AM
  • Analyst Update

Streaming favorite Netflix Inc (NASDAQ:NFLX) is down 1.1% to trade at $1,291.57, after suffering a downgrade to "neutral" from "buy" at Seaport Research Partners. The brokerage said it fears that Netflix's long-term valuation has limited growth potential, specifically with its advertising and new project launches. 

Netflix stock has been on a tear up the charts since mid-2022, with the most recent climb aided by the ascending 20-day moving average. The equity has added 45% in 2025 and tapped a fresh record high of $1,341.15 on June 30. 

The vault up the charts has NFLX's 14-Day Relative Strength Index (RSI) closing last week at 71, on the cusp of "overbought" territory, and a partial catalyst if today's price action takes a turn for the worst.

Options traders have been growing into puts. The equity's 50-day put/call volume ratio of 0.87 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ranks higher than 98% of readings from the past year. So while calls still outflank puts on an absolute basis, the high percentile indicates the rate of put buying is picking up relative to the last 12 months.

Published on Jul 7, 2025 at 9:27 AM
  • Monday Morning Outlook

The S&P 500 Index (SPX – 6,173.07), Nasdaq Composite (IXIC – 20,273.46), and Vanguard Total World Stock Index (VT – 128.00) all pushed to fresh all-time highs. The latter had already pulled back and retested its breakout level successfully, which is a healthy sign of strength moving forward. It’s hard to ignore the resilience of global equities here, rallying in the face of geopolitical risk, political uncertainty at home, and generally cautious positioning — particularly among institutional investors. We’re now in clear blue-sky territory, and when that’s the case, price tends to climb the wall of worry.”

          - Monday Morning Outlook, June 30, 2025

Thanks to Senior Market Strategist Matt Timpane for his astute observations while I was out of the office the past two weeks. 

After reading the above excerpt from Matt’s most recent commentary, in particular referencing the S&P 500 Index (SPX—6,279.35) and Nasdaq Composite (IXIC—20,601.10) move to fresh all-time highs amid “cautious positioning – particularly among institutions investors,” I couldn’t help but find the following excerpt and table from an article interesting.

Asset managers and institutional investors surveyed by Bank of America suggested overwhelmingly that international stocks will be the best-performing asset over the next five years. The bank’s monthly Global Fund Survey, conducted from June 6 through 12, polled 190 investors who collectively manage $523 billion…investors in June were most overweight in their positioning to the eurozone, emerging markets and banks, while being most underweight U.S. equities, the dollar and the energy sector

          - Chief Investment Officer, June 18, 2025

 

Fund Manager Survey

The bottom three rows from the table above intrigued me from a contrarian perspective.

First, the historically underweight positioning in the U.S. Dollar (USD) and energy sector means very little given that the price action has been underwhelming, with the USD recently hitting multi-year lows. It is something to keep in the back of your mind if you see notable improvement in the price action of these assets, or an event that acts as a catalyst to reverse the bearish price action in these assets. But as of now, the underweight positioning among fund managers is of little significance with respect to energy and the USD.

But, with U.S. stocks hitting fresh all-time highs amid a historically underweight positioning by fund managers, this combination of price action and sentiment stands out. It should be viewed as bullish, because with cash overweight (fifth row), fund managers have ammunition to allocate fresh cash to U.S. equities, which are attractive from a technical view amid their underweight position.

Per the chart below, the all-time highs during the past couple of weeks occurred after a bullish “outside day” candle on June 23. Unlike the previous two bullish candles I discussed in prior commentaries, the SPX was not at least 1% lower at its low. But its 30-day moving average that I have keyed on as potential support marked that day’s low before closing back above the pre-Inauguration Day close around 5,995.

SPX Bullish Outside Day

There is little in the way of obvious technical levels overhead on the SPX, but a couple levels worth watching that could induce profit-taking among those anchoring to key levels include:

  1. 6,469, which is 10% above the 2024 close
  2. 6,758, which is 10% above the February closing high
  3. The 6,958 – 7,000 area - the former representing a 161.8% Fibonacci extension of the February high and April low and the 7,000 level a round millennium number that is roughly double the major low in October 2022

Potential support for the SPX lies at 6,144, the previous all-time closing high. The SPX’s 30-day moving average, which is sloping higher at approximately 11 points per day is currently at 6,014 and projected to be at 6,070 by this week’s end. It represents another support level if the SPX moves below 6,144 in the near term.

On the sentiment side, it appears there was a build-up in pessimism among short-term traders as the SPX struggled to distance itself soundly above the pre-Inauguration Day close of 5,995 in late-May and the first half of June. But since the gap higher following the previously mentioned bullish outside day, there is evidence that this pessimism is being unwound and supporting stocks.

The evidence is based on the direction of the 10-day, buy (to open) put/call volume ratio on SPX components, which is rolling over from its mid-June peak. The direction of this ratio, combined with the fact that it still has a little bit of room to decline to levels that have previously spelled trouble for the market, supports the positive seasonality observation through mid-July that Matt pointed out last week.

The only downside to the rollover is that it started at a relatively low level compared to past pessimistic extremes, suggesting the unwind of the late-May through mid-June pessimism is not likely to manifest into a strong, sustained rally like we have seen since the April low. That said, there is still fuel in the tank that can power the SPX to more highs following the late-June breakout.

SPX PC Ratio

 

Bulls should stay the course. The biggest technical risk is that the SPX is the most overbought since mid-July 2024, according to its 14-day Relative Strength Index (RSI) reading of 75.

Similar to the present situation, the index was making new all-time highs as it reached its overbought condition in mid-July 2024, which was the start of about a 10% correction into the early-August low. For some of you, this might suggest implementing a hedge with the Cboe Market Volatility Index (VIX—16.38) near its 2025 low and uncertainty with respect to the July 9 tariff deadline, and end of month Federal Open Market Committee (FOMC) meeting. 

Finally, after the Senate and House’s passage of the “Big Beautiful Bill” after the early market close on Thursday, it will be interesting to see if the latest surge in stocks was a “buy the rumor, sell the news” related to the spending bill. The removal of such uncertainty should be bullish, but we’ll see how this week plays out.

Todd Salamone is Schaeffer's Senior V.P. of Research

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