Options Weekly Roundup: Stocks Slide, Oil Jumps, and Put Buyers Seize the Downside Opportunity

Hello Mooers,

For the week ended March 27, U.S. equities extended their risk-off slide as investors digested a worsening Middle East conflict, renewed concerns over the Strait of Hormuz, and the inflation shock from surging oil prices. The S&P 500 and Dow each fell about 2% for the week, while the Nasdaq dropped 3.2%, with Friday’s selloff pushing the Dow into correction territory and leaving the Nasdaq at seven-month lows. Sector leadership was defensive and narrow: energy outperformed on higher crude, while megacap tech, semiconductors, and consumer discretionary shares lagged as higher rates and weaker sentiment weighed on growth and cyclical exposure. In cross-asset markets, Brent crude closed near $112.57 a barrel and WTI near $99.64, underscoring the market’s stagflation concern. The Cboe Volatility Index rose to 31.05, its highest since April 2023, while the 10-year Treasury yield climbed to about 4.43% as traders scaled back Fed cut expectations and began to price a more hawkish path. The U.S. dollar also strengthened, reflecting a scramble for liquidity amid geopolitical stress.

What's Trending

Despite the market’s continued selloff and choppy trading, high-growth segments such as optical communications and memory have remained resilient. @Monta HONG CFA believes that Lumentum hit a fresh all-time high after OFC 2026 in Los Angeles last week, where the company delivered what may have been the most bullish demand signal the optical interconnect industry has ever seen. AI data-center CapEx is rewriting TAM models, and the supply chain is scrambling to keep up. Here's the trade.

Lumentum’s multi-billion-dollar OCS order is the clearest new catalyst in the optical universe. The market has not yet fully priced in the recurring revenue potential of a dominant position in OCS, a market that barely existed at scale 12 months ago. The spread structure limits upfront cost while preserving upside participation in a move to $850+ over the next three months as revenue ramp confirmation arrives.

In addition, Monta highlighted another optical communications name, Coherent. In the article, he noted that Morgan Stanley explicitly flagged a “news gap” between the enthusiasm coming out of OFC and actual earnings results. This calendar spread is designed to stay largely indifferent to short-term noise: the short April call harvests premium during the quiet period, while the long June call captures a potential earnings-driven re-rating if COHR delivers. Read more>>

Opinions

Against the backdrop of the Iran war, investors betting on Trump’s short-term TACO trade have found the strategy less effective than in previous episodes. @nerdbull1669 argues that while the S&P 500 and Nasdaq have seen relief gains, volatility is far from extinguished. The VIX (Fear Index) recently dropped about 6% to 25.33, but remains well above its historical average of 15–18. Here is why volatility is likely to creep back:

The “Fog of War” Headlines: Much of the recent rally is being dubbed the “TACO” trade (Trump Always Chickens Out), based on the pattern of aggressive rhetoric followed by tactical pauses. However, Iran has publicly pushed back against some of these ceasefire reports, calling them “U.S. assertions.” Any headline confirming a breakdown in talks could instantly send the VIX back toward 30.

And his bottom line is: ...We are in a “neutral phase” where momentum is shifting, but the risk remains skewed to the upside for oil and the downside for equities if diplomacy fails. Expect headline-driven volatility to remain the dominant theme for the rest of March.

The author also provided technical analysis charts for Nvidia and Alibaba. Read more>>

Riding the Wave

Despite the market decline, there are still plenty of trading opportunities worth capturing. A number of mooers took advantage of the selloff by using long put option strategies to profit.

For example, user @10k profit daily has seized the plunge of Meta on March, 26, with a return of 243%. Read more>>

Another user, @106975916, generated a return of more than 200% by buying puts on Palantir. Read more>>

Looking Forward

This Friday (April 3) at 8:30 a.m. ET, the market will get the March nonfarm payrolls report, the first jobs report since the Iran war began, making it a closely watched release.

On Wednesday, April 1, ADP private payrolls will be released before the market opens. Later that morning, at 10:00 a.m. ET, the ISM Manufacturing PMI will also be published and will be another key macro event to watch.

On the earnings front, Nike will report after the close on Tuesday, March 31, making it the most closely watched earnings release of the week.

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🌟Stay tuned for more, and happy trading! 🌟