Daily Options Outlook | Tonight's nonfarm payrolls report is due; NOW up 1.96% in pre-market; memory/storage sector down in pre-market; Broadcom dropped 12.59% yesterday—Q2 earnings beat expectations but AI chip guidance fell short

Pre-market opportunities outlook for today

On the macro front, non-farm payrolls will be released tonight at 20:30 ET. Nasdaq and S&P 500 futures are down 0.99% and 0.47% respectively in pre-market trading. From an options perspective, $Invesco QQQ Trust (QQQ.US)$ has a put/call volume ratio of 0.96 and an open interest ratio of 1.67, indicating investors are using put options to hedge against short-term intraday risk.

$ServiceNow (NOW.US)$ leads software stocks higher in pre-market trading, $Adobe (ADBE.US)$ up 1.42%, $Applovin (APP.US)$ up 0.92%. Options market data shows ServiceNow's put/call volume ratio stands at 0.28, with implied volatility (IV) at 69.07% and IV percentile at 95%, suggesting the market expects significant price swings ahead.

Memory stocks are down in pre-market trading. $Micron Technology (MU.US)$ down 3.31%, $SanDisk (SNDK.US)$ down 1.97%, $Western Digital (WDC.US)$ down 1.95%. The options market shows Micron Technology's put/call volume ratio reached 0.86, with implied volatility (IV) at 105.38% and IV percentile at 98%, indicating significant deployment of put options to hedge against potential stock price volatility.

Review of yesterday's options market

Index Options

On June 4 Eastern Time, U.S. equity index options market volume declined, with a total of 5.68 million contracts traded. The put/call volume ratio rose to 1.07.

As the upcoming expiration date approaches,$S&P 500 Index (.SPX.US)$ Options volume distribution showed the following characteristics: peak put option volume occurred at the 7,470 strike, while peak call option volume was at the 7,600 strike.

Single Stock Options

$Bank of America (BAC.US)$up 3.38%, with 594,800 options contracts traded, and the put/call volume ratio dropped to 0.08. Bank of America plans to launch a cross-border real-time payment service next quarter, enabling corporate clients to make instant transfers via Swift or CashPro platforms.

$Broadcom (AVGO.US)$down 12.59%, with 1,158,400 options contracts traded, and the put/call volume ratio rose to 0.57. Broadcom reported second-quarter earnings that beat expectations, but its AI chip guidance fell short, leading to a stock plunge of over 12%.

Top list of options trading volume

Among the top 10 stocks by options trading volume,$Strategy (MSTR.US)$had the highest put/call volume ratio, reaching 0.89. Strategy sold 32 Bitcoins for the first time since 2022, drawing market attention.

The highest put/call open interest ratio is$Micron Technology (MU.US)$, reaching 1.35. Micron Technology CEO Sanjay Mehrotra sold shares worth approximately $36 million, and the stock fell 7.7% amid fallout from Broadcom's earnings report.

Implied volatility rankings (underlying market cap > $10 billion and options trading volume > 100,000)

$AMC Entertainment (AMC.US)$Implied volatilityreached the highest level at 155.14%, up 17.84% from the previous trading day. AMC Entertainment reported May attendance of 25.5 million, the highest since 2019, but its stock dropped more than 8% due to profit-taking.

$AMC Entertainment (AMC.US)$implied volatility increased the most, reaching 155.14%, up 17.84% from the previous trading day.

Risk Warning

An option is a contract that gives the holder the right, but not the obligation, to buy or sell an asset at a fixed price on a specific date or before that date. The price of an option is influenced by various factors, including the current price of the underlying asset, the strike price, time to expiration, and implied volatility.

Implied volatility reflects the market's expectation of the option's volatility over a certain period in the future. It is derived inversely from the BS pricing model of options and is generally considered an indicator of market sentiment. When investors anticipate greater volatility, they may be more willing to pay higher prices for options to hedge risks, resulting in higher implied volatility.

Traders and investors use implied volatility to assessOption priceto enhance attractiveness, identify potential mispricing, and manage risk exposure.

Disclaimer
This content does not constitute any offer, solicitation, recommendation, opinion, or guarantee of any securities, financial products, or tools. The risk of loss in trading options can be substantial. In some cases, losses may exceed the initial margin deposited. Even if you set contingent orders such as 'stop-loss' or 'limit' orders, these may not prevent losses. Market conditions may make such orders unexecutable. You may be required to deposit additional margin within a short period. If you fail to provide the required amount within the specified time, your open positions may be liquidated. However, you will still be responsible for any shortfall in your account. Therefore, before trading, you should study and understand options and carefully consider whether such trading is suitable for you based on your financial situation and investment objectives. If you trade options, you should be familiar with the procedures for exercising options and the rights and obligations upon exercise and expiration. Options trading carries extremely high risks and is not suitable for all investors. Investors should carefully readCharacteristics and Risks of Standardized Options。

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