I hope everyone had an enjoyable and relaxing vacation. For sure yes. Later today I’ll sit back and watch Indiana take on Alabama in the Rose Bowl. My niece went to IU, so I’ll definitely be rooting for the Hoosiers’ dream season to continue.
As we approach the year 2026, some of my focus will be on the options market in general and unusual options activity more specifically.
The past year has been full of ups and downs for investors, but it’s hard to complain about the fourth straight year of gains for the S&P 500. Valuations remain a concern.
That being said, it is New Year’s Day, a time of optimism for the year ahead. I don’t know where the index will end up at the end of 2026. Bloomberg A survey of 21 analysts suggests a 9% rise, but, as always, there will be pockets of strength.
When it comes to unusual options activity heading into 2026, these three stocks look like good bets to profit in 2026. I rated them as Mild, Medium, and Hot based on their options volume and unusual options activity heading into January.
Canadian Imperial Bank of Commerce (CM), commonly known as CIBC,It is the fifth largest bank in Canada. As of October 31, 2025, it had C$1.12 trillion ($815.9 million) in total assets.
JPMorgan (JPM)CEO Jamie Dimon has expressed concern about a recession in 2026. His economists believe the chances of a recession are 33% heading into the new year.
If you recall, the stocks of the big five Canadian banks outperformed their US counterparts during the 2008-2009 financial crisis (JPMorgan shares lost 65% of their value between October 3, 2008 and January 20, 2009, compared to 39% for CM) and, should another major crisis occur, Canadian banks are positioned to handle the downturn.
However, Canadian bank stock valuations have risen. According to S&P Global Market Intelligence, CIBC’s P/E ratio based on trailing 12 months is 14.77; the five-year average is 11.94x, so you won’t be getting CM for a bargain.
In trading on December 26, CM had options volume of 155,863, 1,788% higher than its 30-day average.
All eight unusually active options on December 26 were in the top 100. All eight expired on January 16; everyone was called. Its first-quarter 2026 results won’t be released until February 20, so this isn’t earnings-related volume.
The 16 analysts covering CIBC are not enthusiastic about the bank’s stock, giving it an Outperform rating from S&P Global Market Intelligence, but only 2.44 out of 5.
Of Canada’s big five banks, CM stock is the second-best performer in 2025, up 39% through Dec. 26, trailing only Toronto-Dominion Bank (TD).69% profit. I see the momentum continuing in 2026.
The last four years have been a nightmare for Nike (NKE) for a long time.shareholders, who have seen their shares lose almost 57% of their value, including 19% in 2025.
As someone who primarily wears Adidas (ADDYY), I’m not surprised that the Beaverton shoe giant has lost its appeal. Their shoes are generally bland and boring.
Since founder Phil Knight stepped down as CEO in 2004, the company has had some poor CEOs (William Perez lasted 13 months and John Donahoe lasted four years), forcing it to turn to its alumni, bringing back Elliott Hill in October 2024, who retired in 2020 after 32 years of faithful service.
Fifteen months into Hill’s tenure, the brand appears to be on the mend, even if it’s not reflected in the stock price. The UBS Evidence Lab just released its 11th global sportswear survey and Nike appears to be gaining momentum.
“Two key elements of Nike’s strategy appear to be working under the leadership of CEO Elliott Hill. First, Nike’s prioritization of re-entering the wholesale channel has resulted in a higher percentage of global consumers reporting that Nike products are easy to find in stores and online, reversing a downward trend from 2019 to 2022.” Invest.com reported on December 29.
“…Second, Nike’s refocused emphasis on sports has resonated with consumers. The percentage of consumers who say Nike is ‘good for sports’ has recovered to its 2019 peak, likely attributable to Hill’s strategic direction.”
Add to this better-than-expected revenue and earnings in the second quarter of 2026: its earnings per share were 53 cents, 15 cents higher than Wall Street’s estimate, while revenue came in at $12.43 billion, $210 million higher than consensus.
Unfortunately, the 17% drop in China sent stocks tumbling. On the positive side, revenue in North America increased 9% in the quarter.
As for Nike’s options volume on December 26, it was 60% higher than its 30-day average. Furthermore, the put/buy volume ratio was bullish at 0.70. I had 14 unusually active options on December 26 with Vol/OI ratios greater than 1.24 and expiring in seven days or more.
It’s a work in progress.
No wonder Nvidia (NVDA)had the highest options volume on December 26 with 3.26 million, 45% above its 30-day average, slightly higher than Tesla (TSLA).volume for the day and a put/buy volume ratio of 0.46, which is very bullish.
As for his unusual options activity, he had 25 calls and puts on December 26 with Vol/OI ratios greater than 1.24 and expiring in seven days or more. Neither is particularly attractive.
What can be said about Nvidia that hasn’t already been said? It is a cash generating machine like few others.
In May 2024, I debated whether Nvidia or Tesla’s 939-day LEAP (Long-Term Stock Anticipation Security) option was the better buy. I sided with CEO Jensen Huang and Nvidia.
“I think AI is as generationally important as the smartphone, maybe even more so,” I wrote on May 24, 2024.
“So even though its initial outlay is four times that for Nvidia, I see it as the best buy option for long-term gains.”
How did that work?
There are 354 days left until expiration, so the jury is still out. Shortly after my article was published, Nvidia completed a 10-for-1 stock split, which changed the numbers by a factor of 10. The buy strike price of $1,100 is now $110, and the ask price of $329.55 would be $32.96 today.
As I write this on December 29, the stock is priced at 41.14% ITM (in the money), with a put price of $86.75, more than double its May 2024 level. Put another way, the put price as a percentage of the strike price was 30% back then; today it is almost 79%, an annualized return of more than 102%.
In May 2024, the stock price was approximately 6% OTM (out-of-the-money). To replicate that situation today, the January 21, 2028 $200 buy strike, with 753 days to expiration (DTE), is your best bet. As shown below, the breakeven point of $250.65 is 27.17% above the current stock price.
I would make this bet.
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
