For many who aren’t listening to the Winter Olympics, Italy leads the medal rely with 17, Norway has probably the most gold medals with 7, and the U.S. is in third with 14. My nation, Canada, has 7 medals, none of them gold. To not fear, our males’s hockey crew will rectify that quickly sufficient.
As for the markets, they have been all solidly within the purple yesterday — S&P 500 down 1.6%, Nasdaq Composite down 2%, and the Dow off by 1.3% — as tech shares, particularly software-related ones, continued to dump amid considerations about AI’s affect on these companies.
Talking of software program shares, Intuit (INTU)misplaced 0.4% on the day. It has now misplaced almost 40% of its worth in 2026. In consequence, for those who wager on INTU 5 years in the past, your funding is value almost 4% much less.
CEO Sasan Goodarzi has his palms full. When he took the job in January 2019, Intuit shares have been round $195; they peaked final June at $813.48. They’ve misplaced 51% since hitting their all-time excessive eight months in the past.
Yesterday’s uncommon choices exercise noticed Intuit rank fourth and fifth in Vol/OI (volume-to-open-interest) at 156.53 and 127.24, respectively. General, it had 12 of the 1,224 unusually lively choices on Thursday, with 5 within the high 100.
Its choices quantity on the day was 270,966, almost seven occasions its 30-day common. It was 3 times the second-highest day by day choices quantity over the previous 24 months.
A deep dive into Intuit’s uncommon choices exercise from yesterday screams a bullish reversal. Right here’s why.
As talked about within the introduction, Intuit’s choices quantity (the best in 24 months) and weird choices exercise (two within the high 5 Vol/OI ratios) speaks to the numerous investor curiosity in software program shares for the time being.
Curiously, whereas its choices quantity was off the charts — most likely the best single-day quantity in its historical past — its total share quantity was about equal to its 30-day common.
What’s occurring right here?
A MarketWatch article from as we speak does an excellent job explaining the forces at work vis-à-vis software program shares with an help from Scott Chronert, Citigroup’s head of U.S. fairness technique.
To Chronert, all of it comes all the way down to terminal values.
“Terminal worth represents the estimated worth of a enterprise assuming it should proceed to develop at a secure, fixed fee indefinitely. It’s a main part of discounted cash-flow evaluation,” MarketWatch contributor Jaimie Chisolm writes.
The issue, as Chronert sees it, the markets have priced in a ten% discount in terminal values, however costs have but to replicate a 20% discount. It’s a flowery approach of claiming the bloodletting may not be executed.
Supply: Citigroup, MarketWatch
He believes within the near-term, a backside is in — therefore why 11 of Intuit’s 12 unusually lively put choices yesterday had DTEs (days to expiration) of lower than 45 days — however transferring ahead, buyers can be trying extra intently at software program shares, assessing on a company-by-company foundation, which have sustainable enterprise fashions 5-10 years out, and people who don’t.
I imagine Intuit’s sturdy manufacturers (Intuit, QuickBooks, TurboTax, Credit score Karma) and its adoption of AI will allow it to take care of a robust market share going ahead.
However for now, let’s think about why yesterday’s uncommon choices exercise indicators a bullish reversal, and the choices technique buyers are utilizing to profit.
Barchart’s Choices Circulation web page from yesterday exhibits Intuit’s choices had a internet commerce sentiment of almost $675 million. That’s very bullish. The Feb. 20 places had 21 trades with volumes of 1,000 or greater; seven over 10,000.
The put choice that stands out for me is the Feb. 20 $490 strike value. With a quantity of 105,110 (39% of the day’s whole) and open curiosity of 12,026, it was very fashionable each yesterday and within the previous days.
The largest commerce was 52,310 for $479.2 million premium. The commerce value was on the bid value of $91.60, indicating a bullish view for INTU inventory. The 11,600 contracts traded on the identical time have been one cent off the bid, additionally bullish. The opposite 5 trades have been comparatively impartial in sentiment.
It will likely be fascinating to see what it does as we speak. Early in buying and selling, INTU is down a few bucks with low choices quantity. My guess, like yesterday, the choices quantity will choose up within the final hour of buying and selling.
Each the 52,310 and 11,600 trades have been multi-leg, which leaves out a single-leg cash-secured put technique. However let’s think about it.
Primarily based on the bid value of $91.60, promoting the $490 put would generate an 23% return [$91.60 bid price / $490 strike price – $91.60 bid price], 1,049% on an annualized foundation [23% * 365 / 8].
That’s some return.
After all, as a result of it’s ITM (in-the-money) by 23% and solely eight days to expiration, barring a miracle of epic proportions, you should have the shares assigned to you, leading to a internet buy of 100 INTU shares at $398.40 [$490 strike price – $91.60 bid price (premium)].
If the shares have bottomed, as Chronert suggests, it’s not a foul transfer. Nevertheless, if the downward spiral continues, main as much as its Q2 2026 outcomes being launched on Feb. 26 after the markets shut, you would be sitting on a decent-sized paper loss.
The anticipated transfer is 5.2% over the following week. Primarily based on a share value of $399.57, the lower cost is $378.79, and the higher value is $420.35. Assuming the worst, you’re taking a look at a paper lack of $20.78 a share ($2,078).
Solely aggressive buyers want apply.
On the date of publication, Will Ashworth didn’t have (both straight or not directly) positions in any of the securities talked about on this article. All data and knowledge on this article is solely for informational functions. This text was initially revealed on Barchart.com
