Options Weekly Roundup - With Market Momentum Fading, Can NVIDIA’s Earnings Thaw the AI Narrative?

Hello Mooers,

Over the past two weeks, U.S. equities swung between cooling-inflation relief and a renewed risk-off impulse, with the market increasingly sensitive to headlines and guidance. Macro data sent mixed signals: retail sales came in flat, raising questions about consumer momentum, while inflation prints were softer than expected, briefly pulling yields lower and supporting stocks. At the same time, the tone from the latest FOMC minutes reinforced a “higher for longer” bias, limiting the durability of rallies.

Policy risk also resurfaced. A Supreme Court decision striking down Trump’s global tariffs, followed by talk of replacement tariffs, added to uncertainty and helped drive late-period volatility. On the corporate side, earnings were generally better than feared, with many S&P 500 companies beating estimates, but markets punished anything that lacked forward momentum. Tech was bifurcated: AI-disruption worries weighed on software multiples, while parts of the semiconductor complex found support from upbeat demand signals (e.g., strong commentary from Applied Materials tied to AI-driven capex). Overall, the tape felt like a tug-of-war between fundamentals improving at the margin and policy/positioning risks keeping risk appetite fragile.

What was trending in the past weeks?

(1) CPI and the “AI disinflation” narrative

U.S. CPI data was released at 8:30 a.m. ET on Feb 13. Headline CPI came in below expectations both month-over-month (0.2%) and year-over-year (2.4%), while core CPI matched expectations at 0.3% m/m and 2.5% y/y. Although inflation is still edging closer to the Fed’s 2% target, the pace of improvement remains modest—making it hard for the Fed to confidently pivot into aggressive rate cuts. Meanwhile, the disinflationary effects of AI and the broader tech revolution seem to be resurfacing, though the durability of that trend still needs confirmation from the upcoming jobs data.

In @LukeHW’s article “Wait-and-See Markets + Tactical Options Flow Ahead of Jobs & CPI”, he highlighted labor-market softening and AI-driven structural shifts:

The January job report usually includes annual revisions to employment conditions. Likely a downward revision. Fed Chair Powell in the December FOMC press conference mentioned the official payroll data has been systematically overestimating job creation by up to about 60k jobs per month since around April 2025. If you compare the revision to an average job gain under 40k/month in that window, it's hard to believe a notable 'employment rebound' narrative. Especially considering what we have so far: weak ADP (+22k vs. +48k consensus), high Challenger cuts (108k in Jan, highest since 2009, with AI cited for 7,624 job cuts, or 7% of the total), soft ISM services employment (50.3), and JOLTS below forecasts.

AI’s rapid development, on one hand, fuels a productivity surge; on the other, it creates a “low-hire expansion”: strong output per worker offsets weak headcount, keeping the economy resilient—but leaving the Fed unable to “fix” structural AI-related labor weakness. So the key is how large the downside revision ends up being; if it’s significant enough, it could increase pressure on Powell to support a rate cut later this month. Read more>>

(2) Crypto-linked earnings in focus after the sell-off

After the sharp early-February crypto drawdown, earnings from several major crypto-linked equities drew broad attention. Robinhood and Coinbase reported earnings on Feb 10 and Feb 12, respectively. On this, @Invest with Sarge provided both fundamental and technical analysis on Coinbase, along with an options strategy setup.

The Street is looking for the company to report $0.66 in Q4 earnings per share on about $1.85 billion of revenue.

That wouldn't compare favorably at all to the company's year-ago quarter, when COIN posted $4.68 in EPS on about $2.3 billion of revenue.

In fact, if Wall Street's estimates are correct, Coinbase will see an 85.9% year-over-year drop in adjusted EPS and about an 18% y/y decline in revenue.

Making matters worse, all 15 of the sell-side analysts that I know of who cover this stock have reduced their earnings estimates since the quarter began.

Options traders who are still optimistic about Coinbase's prospects going into earnings despite all the technical indicators to the contrary might employ a counter-trend trade.

Here's an example that involves going long one call and short another with a higher strike price, where both options expire on the same day:

-- Long one COIN call with a Feb. 13 expiration (i.e., after earnings) at a $155 strike price. This would cost about $12.10 at recent trading levels.

-- Short one COIN Feb. 13 $170 call for a roughly $4.65 credit.

Net Debit: $7.45.

Options traders using this set-up would be risking the $7.45 net debit, the trade's maximum theoretical loss. They'll see this if COIN trades at or below $155 at expiration.

Conversely, this trade would offer a $15 return if COIN trades at or above $170 at expiration, for a $7.65 maximum theoretical profit. Read more>>

Trading Insights

Recently, rising geopolitical tensions have pushed oil prices higher. At the same time, developments around Venezuela have fueled expectations that more U.S. oil & gas companies could expand their presence there. Exxon Mobil (XOM.US) has emerged as one of the biggest perceived beneficiaries, with the stock rallying strongly for two consecutive months.

In a deep dive, @LukeHW analyzed XOM’s fundamentals and moat—and also pointed out notable shifts in the options market.

Yesterday's trading volume shows Exxon's volume jumped to 2.37 million, only trailing after Tesla's 2.57 million.

For its entire February and March volume composed 95.7% of the total trading volume, and calls outnumbered puts ~31.13x; those calls largely on 120/125 strike, since deep in-the-money, have average delta close to 1, almost same exposure to the price movement as owning the stock.

Behind the bar, it is not for the pure reason of strong bullish conviction, but the company's dividend capture strategy.

Dividends are priced in advance through the forward price. For calls, this means call premiums are suppressed (cheaper) as ex-div approaches because the market expects the stock to drop by roughly the dividend amount on ex-div day. This makes buying calls right before ex-div generally unattractive (you’re paying for a forward that already subtracts the dividend). Instead, the logical play with calls is usually on the selling side, combined with owning the stock.

Timing around ex-div is critical for dividend capture strategy, deep in-the-money (ITM) covered calls are used right before ex-div (a tactic seen with hedge funds). You get a bigger premium (mostly intrinsic), the net cost basis drops significantly, and the ex-div drop + any remaining time value can make it profitable even if assigned. Read more>>

Riding the Wave

The sharp market swings have created lucrative trading opportunities. @Kenneth Sg used same-day expiration options on the S&P 500 ETF (SPY.US) to capture a 5x return. Read more>>

Similarly, using index ETFs as well, @xceantex traded 0DTE SPY calls and achieved a 354% return. Read more>>

Taking the opposite approach to 0DTE trading, @Watermelon Bull combined short-dated NVDA sell puts with mid-to-long-dated long calls, and the results were very satisfying. Read more>>

Looking Forward

This week, the biggest focus is undoubtedly NVIDIA earnings and PCE inflation data. In addition, earnings from high-profile names like CRWV and RKLB are also drawing attention!

– Wednesday (2.25) after-hours: NVDA, CRM, SNPS, SNOW

– Thursday (2.26) after-hours: VST, CRWV, RKLB

– Friday (2.27) pre-market: PCE data release

With multiple macro, geopolitical, and earnings factors in play, market volatility may pick up this week—creating more opportunities for options trading!

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Stay tuned for more, and happy trading! 🌟