Late last night streaming leader Netflix Inc (NASDQ:NFLX) announced it will no longer partake in the bidding war to purchase Warner Bros Discovery Inc (NASDAQ:WBD), after an extended battle against Paramount Skydance (PSKY). After Paramount's latest offer was noted as superior, Netflix refused to counter, leaving the former to pay the $2.8 billion fee for the breakup.

At last glance, NFLX is surging, up 9% at $92.15, while WBD is pulling back, off 1.9% at $28.26. Netflix stock is distancing itself from a Feb. 23 annual low of $75.01, now headed for its best daily performance since January 2025. WBD, meanwhile, has slipped below its year-to-date breakeven mark and is eyeing a third-straight loss after suffering a a 0.3% post-earnings pullback yesterday. Support at $28 could step up amid the bull flag pattern forming since December.

WBD has received several bear notes in response, including a downgrade to "underperform" from "outperform" at Raymond James. More bear notes could be in the cards, too, with eight of the covering brokerages sporting a "buy" or "strong buy" recommendation.

Options traders have chimed in, with NFLX seeing 418,000 calls and 166,000 puts across the tape so far, seven times the average intraday rate. Seeing the most attention is the March 100 call. WBD has seen 18,000 calls and 23,000 puts exchanged, double the average volume, with the March 24 put seeing ample trading.

Options are looking affordable for both. Netflix and Warner Bros Discovery stock sport a Schaeffer's Volatility Index (SVI) of 41% and 25%, respectively, both of which stand higher than 11% and 7% of all other readings from the past year. In other words, near-term option traders are pricing in relatively low volatility expectations.

Dell Technologies Inc (NYSE:DELL) stock is brushing off the market mayhem today, last seen up 17% to trade at $142.32. The tech titan reported adjusted fourth-quarter earnings of $3.89 per share on $33.38 billion in revenue, both of which exceeded analyst estimates. Fiscal guidance for 2027 more than doubled, with AI server revenue amid data center demand the main driver.

Seven brokerages have issued price-target hikes in response, the best coming from Raymond James to $182 from $166. DELL is breaking out of consolidation today, heading for its highest close since Nov. 10, and now 31% higher year-over-year. 

A short squeeze could keep the wind at the equity's back. Short interest rose by nearly 6% in the two most recent reporting periods, and the 27.45 million shares sold short account for a healthy 8.9% of the stock's total available float. At DELL's average pace of trading, it would take shorts almost four trading days to buy back their bearish bets.

Options traders have been betting bearishly. Dell's 10-day put/call volume ratio of 1.22 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 92% of other readings from the past year.

Echoing this is the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.16, which ranks in the 88th percentile of its annual range. An unwinding of these bearish bets could generate additional tailwinds.

Today, there's a shift toward calls. In just the first hour of trading, 53,000 calls have changed hands, 11 times the average intraday amount and nearly double the number of puts moving. The weekly 2/27 130-strike call is the most popular.

Broadband satellite stock AST SpaceMobile Inc (NASDAQ:ASTS) is 2% higher to trade at $84, as investors gear up for the Starlink rival's fourth-quarter report, due out after the close on Monday, March 2. Analysts are predicting a quarterly loss of $0.18 to $0.20 on revenue of $40.69 million. 

Historically, ASTS has finished the day higher after four of its last eight reports, averaging a move of 22%, regardless of direction. However, most of this accounts for a massive 68.% melt up from May 2024. This time around, investors expect a smaller-than-usual 15.3% move for Tuesday's trading.

ASTS boasts a 208% year-over-year lead, but has taken a 35% haircut off its Jan. 30 record high of $129.89. Despite the drawdown, support has stepped up at the shares' 100-day moving average.

Short sellers have been piling on. Short interest is up 8.9% in the last two reporting periods, and now makes up 28% of the security's available float. An upbeat report could  make ASTS a short squeeze contender in the coming weeks.

In the options pits, traders have been leaning toward calls. ASTS sports a 50-day call/put volume ratio of 2.07 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) which stands higher than 75% of all other annual readings.

Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.57 sits in the 1st percentile of its annual range, suggesting short-term option players have rarely been more call-heavy throughout the past 12 months. 

The last thing investors are thinking about right now -- as Wall Street wrestles with AI disruption -- is a short squeeze. But maybe that's what contrarians should be doing now, monitoring stocks to buy the dip on that could send bearish bettors packing. 

This screen finds stocks where the shorts might be at a big loss and therefore likely to begin covering. Obviously, there are quite a few assumptions so these would be very rough estimates.

To estimate the return for the shorts, Rocky went back over the past year of short interest reports to find when the shorts were added. Then he used the average price over the prior two weeks and estimated the shorts were added at that average price. Below are stocks where significant shorts have been added and they could be at a big loss. 

Bear in mind, this data is from the most recent reporting period (2/15).

Highlights on the list include Starlink competitor AST SpaceMobile (ASTS), Southern Copper (SCCO), and cryptocurrency data center Applied Digital (APLD). 

Index options and stock options are quite similar, but there are quite notable differences. For instance, with an index option, traders know for a fact whether the position is long or short the market. On the other hand, traders utilizing stock (or equity) options are not dependent on a full market outlook and are instead focused on predicting the direction of a specific underlying stock or equity.

It is common to confuse the index options and stock options and to assume all options are the same, especially for those newer to trading options. After all, it isn't possible to just trade the S&P 500 Index (SPX) on the market; and the SPX is an index. What exactly is an index, then? An index is a calculation using the weightings of various component groupings like the S&P 500 or the Nasdaq-100 (NDX). Additionally, pricing is automatically calculated based on the changes in price for the components of the index. When trading indexes, it's important to remember that you are trading options, not shares of the index!

Understanding How Options Contracts Work and Options Trading Essentials

First, what exactly is an option? An option is a contract between two entities, a buyer and seller, that guarantees the product will be delivered at the date of expiration. The delivery is typically related to the value of the underlying asset or component, like equities or indexes.

Understanding How Indexes Relate to the Stock Market

Here are few popular indexes that its critical, as a trader, to be familiar with:

• $SPX – S&P 500 Index
• $OEX – S&P 100 index
• $VIX – Cboe Volatility Index
• $XEO – S&P 100 (European) Index
• $RUT – Russell 2000 Index
• $DJX – Dow Jones Industrial Average 1/100 Index
• $NDX – NASDAQ 100 Index

There are other index options trading on U.S. stock exchanges, but these are rare. Remember that you most likely need to add the "$" ahead of typing in the index symbol when looking these indexes up on a brokerage site.

If you are ready to begin capitalizing on the power of index options, check out Schaeffer's Wealthbuilder for trades on the S&P 100 Index (OEX), the Nasdaq 100 Trust (QQQQ)m and the Russell 2000 Index (IWM). Trades from this service are guaranteed to deliver you an 80% win rate or you will receive your full subscription fee back at the end of 12 months.

Quick Overview: Index Options vs. Stock Options

There are two main components that make an option: the option premium and the strike price. The option premium is the fee paid to purchase the option. With stock/equity options, the strike price is determined by the options seller. If you buy a call option, a specific strike price is offered to you. In contrast, with index options, the strike price is not set by a specific seller and the index option strike price varies based on where the specified stock market trades at the point of purchase.

As most know, there are two types of option: calls and puts. Traders can either buy or sell calls and puts on most major exchanges and brokerage platforms based on his or her trading goals.

Stock/equity options are contracts purchased by traders based on the underlying equity and, when purchased, the options trader either buys or sells the option at a given strike price with an expiration date. After the option(s) expire, the trade is completely closed.

Index options are intended to give traders a chance to benefit from a market move and can also protect a trader's portfolio holdings. The most significant difference between equity options and index options lies in the component where the options derive value in an index. Index options enable options traders to buy and sell based on broader market performance or specific sector performance. Index options provide traders with an opportunity to pay a small premium compared to the actual contract price.

How does Cash Settlement Differ Between Index Options and Stock Options?

Another critical difference between stock options and index options lies in the settlement process

Let's start with an example of a stock option. One call option for DIS is about to expire in-the-money. If the trader had not previously sold the stock option prior to the close of the market on the expiration date, 100 shares of DIS are added to his trading account at the strike price.

On the other hand, here is an example of an index option. One call option for SPX is about to expire in-the-money. In this situation, the trader would receive the intrinsic value of the position. If the trader had not previously sold the index option prior to the close of the market on the expiration date, a deposit equivalent to the the intrinsic value of the index option would be made in his trading account.

Are the Settlement Rules Different for Index Options and Stock Options?

The topic of settlement rules can be pretty dull. However, understanding these rules and differences related to the buying and selling of index and stock/equity options is important nonetheless. Traders can end up in trouble with headaches and losses without this necessary information.

Index options can settle based on regular options and weekly option. Regular options are more like a standard stock, with a variety of differences in the weekly options. An index typically settles on Thursday at the market close, based on the first trade being made on Friday. Stock options settle on the third Friday of each month, with the exception of weekly stock options that expire every Friday except the third Friday of each month.

A Simple Comparison of Index Options and Stock Options

 Pros:

• Index options offer access to a market with more liquidity.
• Stock options provide you thousands of options with various prices
• Index options offer cash settlements.
• Stock options offer inexpensive price options.

Cons:

• Index options only offer a few choices that are relatively higher priced.
• Index options require more capital in your account.

Summary

For traders, index options and stock options are both essential tools for successful trading and capitalization of your trading portfolio. Index options are utilized for speculation and hedging positions in a liquid, tax-preferential market. Stock options are utilized when traders look to inexpensively purchase a bundle, typically 100 shares, on an equity. While no options are suitable for every trader, both index options and stock options provide extensive trading opportunities to traders of all levels of experience.

Despite Nvidia Corp (NASDAQ:NVDA) dishing out a fourth-quarter earnings and revenue beat, the chip behemoth was last seen trading 2.4% lower at $190. Investors are dismissing the company's data center growth and revenue of $68.13 billion, instead zeroing in on the long-term impact AI infrastructure will have on hyperscaler spending and cash flow.

Despite the price action today, no fewer than 12 analysts have hiked their price targets on NVDA this morning, including at Melius Research to $380 -- double the stock's current trading price.

Nvidia stock has been choppy of late, with recent pullbacks captured by $170. Although shares have been unable to breach the $200 ceiling since November, the stock remains up 44% year-over-year.

Options traders are all in. So far 924,000 calls and 538,000 puts have crossed the tape, triple the average intraday rate. Most popular are the weekly 2/27 195- and 200-strike calls, with new positions being opened at the latter.

Plus, NVDA's Schaeffer's Volatility Scorecard (SVS) comes in at 24 out of 100. In other words, the security has consistently realized lower volatility than its options have priced in over the past 12 months, making it a premium selling candidate. 

IonQ Inc (NYSE:IONQ) stock is 20.9% higher to trade at $38.76, on track for its best single-session gain since May 22. The quantum computing maven reported fourth-quarter revenue of $61.9 million far exceeding the $40.4 million estimates. The impressive revenue complimented a Q4 earnings beat of $1.93, significantly above the anticipated loss of $0.48.

CEO Niccolo de Masi said the quantum pure play is "at an inflection point." The sector leader is also lending a boost to D-Wave Quantum (QBTS) and Rigetti Computing (RGTI) -- both up 6.3% and 5.5%, respectively.

Despite the report, six brokerages trimmed their price targets, including J.P. Morgan Securities to $42 from $47. IonQ stock is still down 8% in 2026, but has support in place at $30. 

A short squeeze could help sustain the rally. Short interest is up 7.6% in the most recent reporting period, and the 79.28 million shares sold short account for 22.7% of the stock's total available float. 

Options traders have been betting bearishly. IONQ's 10-day put/call volume ratio of 1.74 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 79 % of other readings from the past year.

Today though, 66,000 calls have changed hands in the first hour of trading -- volume that's eight times the average intraday amount and almost double the number of puts exchanged. The March 50 call is the most popular, with new positions being bought to open here.