Yesterday was not a good day for the markets. The S&P 500 lost 1.23% on Thursday and the Dow lost 1.20%. Meanwhile, tech and Bitcoin-related stocks also had a bad day, with Qualcomm (QCOM) and Strategy (MSTR) falling 8% and 17%, respectively.
The good news for investors is that the index is up almost 0.9% as I write this, one hour into Friday trading. The bad news is that the labor market seems weaker every day. The latest data from the US Department of Labor showed that the number of people filing initial unemployment claims rose by 22,000 last week to 231,000, the highest level in the past eight weeks, and 19,000 more than expected.
I don’t know if this latest episode of volatility has any consequences. I guess we’ll see if today turns negative and the losses carry over to next week.
Among the 2,000 unusually active options that yesterday had Vol/OI (volume-to-open interest) ratios of 2.71 or more, a volume of 500 contracts or more, and expiry in seven days or more, 278 had Vol/OI ratios of 15 or more.
In today’s commentary, I’ll look at 3 stocks whose call or put options were among the 278 and whose strike prices were within $1 of their share price, essentially ATM (at-the-money), and what options strategies investors could use to make big profits.
As for Sunday’s big game, I’m 100% behind the Seahawks and Sam Darnold.
Have a great weekend and enjoy the Super Bowl!
VF Corp (VFC)had the fifth highest Vol/OI ratio at 97.08. Its shares are up 13.3% so far this year. However, they have dropped 75% in the last five years.
The clothing and footwear maker, whose three leading brands are The North Face, Vans and Timberland, is in the midst of a shift that has seen divestitures, job cuts and other drastic measures to resize the business and prepare it for renewed growth. CEO Bracken Darrell Hired Away from Logitech (LOGI)in June 2023 to oversee the change.
Analysts are undecided on VFC stock. Of the 22 analysts covering it, only three rate it as a Buy (3.00 out of 5), with a price target of $18.58. However, the bar chart technical opinion is a Strong Buy, indicating a much more positive near-term outlook.
He was optimistic about VF’s future in November 2023; I am even more so today.
Given the $20 put and a bullish view, the simplest strategy would be a cash collateralized put. Based on the bid price of $1.28, the annualized return would be 47.7% ($1.05 bid price / $20 strike price – $1.05 bid price * 365/43 DTE (days to expiration)).
There isn’t much volatility in its stock, but if that worries you, I would do a married put: buy 100 shares of VFC at $20.10 and a long put at $1.33. Your maximum loss is $1.43 ($20.10 stock price + $1.33 put price – $20 strike price). While your maximum profit is unlimited, you will make money at expiration if the stock price is above the breakeven point of $21.43.
Etsy (ETSY)had the 28th highest Vol/OI ratio at 32.69. I also included the $55 call, which expires a week later. He had the 41st highest finish at 28.35. Its shares are up 4.1% so far this year. However, they are also down 75% in the last five years.
The two-way, craft-focused online marketplace that brings together buyers and sellers doesn’t have the revenue growth it once had (in 2020, at the height of COVID, it had 111% year-over-year growth), but its margins remain healthy. Its gross margin in the trailing 12 months ended September 30, 2025 was 72.0%, according to S&P Global Market Intelligence, just 110 basis points below its 2020 record. Meanwhile, its EBIT (earnings before interest and taxes) margin was 13.8%, the highest since 2022.
Analysts are lukewarm about its stock. Of the 32 analysts covering it, seven rate it a Buy (3.25 out of 5), with a price target of $66.96, considerably higher than its current share price.
Two things caught my attention as I caught up on where he was: First, in December, he announced a new $750 million stock buyback plan, on top of the remaining $200 million from the previous plan. With free cash flow in 2025 likely to approach $800 million, you’ll have plenty to buy back your cheap shares. Second, at the same time he announced the buyback, he appointed venture capitalist Fred Wilson as the company’s lead independent director. On the board since 2007, his presence will provide stability as it seeks renewed growth.
All things considered, I see Etsy as a decent value option right now. While I wouldn’t say I’m overly optimistic about its sales growth, I do think there’s money to be made in its stock over the next 12 to 24 months.
I would make a call with secured cash at any of the DTEs. Etsy’s stock price is up 6.5% as I write this. The February 13 sale price of $55 is $3.90, an increase of $2.30 from yesterday, while the February 20 sale price is $5.85, an increase of $2.75. You would already be making money.
Pfizer (PFE)had the 35th highest Vol/OI ratio at 31.13. Its shares are up 9.1% so far this year. They have dropped 22% in the last five years.
The drugmaker has struggled to match the success of its vaccine during the height of the COVID-19 pandemic. That has kept its share price frozen. On January 9, I discussed two options strategies for unusual Pfizer options activity: a Long Straddle and a Bull Put Spread.
Pfizer was scheduled to report its fourth-quarter 2025 results on February 3. They were generally positive, with revenue of $17.56 billion, $61 million higher than Wall Street estimates, and earnings per share of $0.66, nine cents higher than consensus.
While analysts are lukewarm on its stock (8 of the 25 analysts covering it rate it a Buy (3.44 out of 5), with a price target of $28.43), a look at its chart suggests it has bottomed out and is slowly recovering from the losses of the last three years.
Yesterday, Pfizer announced that its experimental weight-loss drug PF-08653944, currently in clinical trials, is delivering promising results for participants. The drug, which consists of a single injection each month, could be an effective competitor to those already sold by Novo Nordisk (NVO)and Eli Lilly (LLY).
It’s still early, but it’s another reason to bet on Pfizer finally emerging from its crisis.
Based on the $25.50 put on March 6, I’m going to go out on a limb and suggest a double bull spread, which is the combination of a bull call spread and a bull put spread. Buy strike prices should be above $25.50, while sell strike prices should be below.
Here’s what they look like in Friday’s trading.
The maximum loss for this strategy depends on which of the puts falls short. This is because the difference between the two call strikes must be the same as the difference between the two put options.
So using the short $26.50 put, a difference of two strikes, you would go for the long $27.50 call and the short $28.50 call. The combination of those four options would be a net debit of $0.17 (ask prices of $0.56 + $0.20 – offer prices of $0.22 + $0.37).
The maximum loss would be $0.83 ($26.50 put strike – $25.50 put strike – $0.17 net debit), while the maximum gain would also be $0.83 ($28.50 buy strike – $27.50 buy strike – $0.17 net debit).
The maximum profit would be achieved if Pfizer’s stock price on March 6 was above $28.50, while the maximum loss would occur if the stock price was below $25.50. Breakeven is reached if the stock price at expiration is between $28.50 and $25.50.
On the date of publication, Will Ashworth had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
