MW How options trading in Palantir, Uber and Fortinet offers clues to the stocks' postearnings moves

By Lawrence G. McMillan

Key market indicators currently point to more upside for the S&P 500

Palantir Technologies (PLTR) reported earnings this week, and the option market had anticipated a strong move. Option traders priced the near-term straddle at 19.25 points, or 12%. That is, they were expecting a large gap move after the earnings. They were overly optimistic. Granted, the stock did move that far in the next two days, after reporting strong earnings, but the one-day move was 13 points.

Uber Technologies (UBER) was another highly anticipated earnings report. Here, the options market was looking for a move of 6.5 points, or 7.2%. Instead, UBER barely moved after the earnings. That is now two quarters in a row where UBER's post-earnings move was small. Perhaps the analysts have figured out how to correctly predict the company's earnings.

One earnings report where the option market underpriced the projection, was Fortinet $(FTNT)$. The company reported earnings after the close on Wednesday and it was a large miss. The stock is cratering in Thursday trading. The option market had priced the straddle at 9.50 or 9.7%. Thus, in this case, buying the straddle was a profitable move.

We generally compare the current straddle price to the stock's previous post-earnings moves. For example, that FTNT straddle price (9.7%) was cheaper than six of the past 10 post-earnings moves, so the odds were slightly in your favor if you bought the straddle. With Uber, the 7.2% straddle price was only cheaper than four of the past 10 post-earnings moves, so it wasn't a good purchase. Palantir was right in the middle, as its straddle price of 12% was cheaper than five of the past 10 post-earnings moves: basically a coin-flip.

Looking at the broader U.S. market conditions, the S&P 500 Index SPX seemed heading into a correction last week, but the downswing lasted just a couple of days before the rally resumed. There is now solid support at 6,200 - tested twice during the last month of trading. There is also support below there, at 6,150 - the previous all-time highs of February. If SPX should decline below 6,150, that would likely bring in heavier selling. This doesn't seem likely soon, so the SPX chart remains bullish with solid support at 6,150-6,200.

There were some recent sell signals, but the market (SPX) is ignoring them pretty much so far. A McMillan volatility band (MVB) sell signal was confirmed when SPX traded down through 6,316 on August 1, and it remains in effect. It is marked with a green "S" on the SPX chart above. It would be stopped out if SPX were to close above the +4<SIGMA> "modified Bollinger band" (mBB), which is nearing 6,500 and rising.

In addition, the equity-only put-call ratios rolled over a couple of weeks ago and began to rise. That is bearish for stocks, and so this indicator remains bearish, as these ratios are steadily climbing. This sell signal would only be reversed if these ratios peaked and began to trend lower.

Market breadth had also weakened to the point where both breadth oscillators generated sell signals. After that, the stocks-only breadth oscillator descended into oversold territory and has now improved enough to generate a buy signal. The NYSE-based breadth oscillator, however, remains on a sell signal. So, with the category being somewhat mixed, it is considered to be a neutral indicator at the moment.

New lows outnumbered new highs on the NYSE for just one day. That is not enough to stop out this buy signal, which has been in place since late June. It would take two consecutive days of new lows exceeding new highs in order to trigger a stop.

Realized volatility, as measured by the 20-day historical volatility of SPX (HV20), had fallen to 6% when the market was rising steadily. But recent action has elevated HV20 to 10%. That is a new sell signal for stocks. This indicator has a spotty track record, but when it is right, it is normally right in a big way. For example, it gave a sell signal in December 2023, which was not a productive trade. But then it also gave a sell signal in July 2024, which was. Those were the two most recent signals.

Unrealized volatility - as measured by the VIX VIX - jumped higher briefly last week when SPX sold off. But it has since fallen back towards 16. This has created a new "spike peak" buy signal, which was confirmed on August 4. It will remain in effect for 22 trading days, but it would be stopped out if VIX were to close above its most recent peak of 21.90. This new signal is marked with a green "B" on the accompanying VIX chart.

In addition, the trend of VIX buy signal (for the stock market) remains in effect. It began back in early June and would be stopped out if VIX were to close above its 200-day moving average for two consecutive days. That has not happened yet, although it did close above it for one day recently.

The construct of volatility derivatives has retained a bullish outlook for stocks throughout the recent correction period. The term structures of both the VIX futures and the Cboe volatility indices continue to slope upward. Moreover, the VIX futures are trading at a healthy premium above VIX. The weighted futures calculation that we compute, VOLFUTA, stands at 1.90 - well above any level that would warrant caution.

So, we remain overall bullish in that the SPX chart is bullish with strong support. Additionally, several of our indicators remain on buy signals. Recently, however, a few sell signals have crept into the picture, and they should be acted upon as well. Each trading signal has its own targets and stops. In any case, continue to roll deeply in-the-money options in order to lock in some profits and reduce risk of a stock market reversal.

New recommendation: VIX 'spike peak' buy signal

As noted in the market commentary above, there has been a new VIX "spike peak" buy signal.

Buy 1 VIX (Sept. 19) at-the-money call and sell 1 VIX (Sept 19) call with a striking price 20 points higher.

This trade will be held for 22 trading days from the time of the original signal (August 4). It would be stopped out if VIX were to close above its recent peak price of 21.90.

New recommendation: Hewlett-Packard Enterprise $(HPE)$ puts

There is a new put-call ratio sell signal in HPE. The stock has already broken down below support. Buy 4 HPE (Nov. 21) 20 puts in line with the market.

As usual, we will hold these puts as long as the put-call ratio sell signal for HPE is in place.

Follow-up actions:

All stops are mental closing stops unless otherwise noted.

We are using a "standard" rolling procedure for our SPY SPY spreads: in any vertical bull or bear spread, if the underlying hits the short strike, then roll the entire spread. That would be roll up in the case of a call bull spread or roll down in the case of a bear put spread. Stay in the same expiration and keep the distance between the strikes the same unless otherwise instructed.

For outright long options, roll if they become 8 points in-the-money.

Long 2 APH (Aug. 15) 100 calls: Roll up and out to the APH $(APH)$ (Sept. 19) 110 calls. The closing stop remains at 101.

Long 1 TSEM (Aug. 15) 50 call: Roll these calls up and out to the TSEM $(TSEM)$ (Sept. 19) 49 calls. Roll up again at 55.

Long 0 SPY (Sept. 19) 635 call and short 0 SPY (Sept. 19) 685 call: This is the position based on the differential between implied and historical volatility. It was stopped out on August 1, when SPY closed below 626.

Long 0 SPY (Aug. 22) 635 calls: This position was bought in line with the cumulative volume breadth (CVB) buy signal. It was stopped out on August 1, when SPY closed below 626.

Long 1 SPY (Aug. 15) 625 call and short 1 SPY (Aug. 15) 640 call: This position is the trend of VIX buy signal. Stop out if VIX closes above 20 for two consecutive days.

Long 0 SPY (Aug. 22) 635: this is the remnants of the most recent "spike peak" buy signal. It was stopped out on August 1, when VIX closed above 18.03.

Long 5 SVXY SVXY (Aug. 15) 44 calls: We monitor the weighted VIX futures premium via a proprietary calculation. Specifically, the calculation is currently at 1.79. This trade would be stopped out if it drops to 0.50 or lower. We will update the calculation weekly.

Long 1 SPY (Aug. 29) 625 call and short 1 SPY (Aug. 29) 645 call: We will hold until new lows outnumber new highs on two consecutive days on the NYSE.

Long 1 AAPL (Aug. 15) 210 call and short 1 AAPL (Aug. 15) 225 call: We will hold as long as the weighted put-call ratio for AAPL $(AAPL)$ remains on a buy signal.

Long 3 DOCU (Aug. 15) 80 calls: These were bought when DOCU $(DOCU)$ shares closed above $80 on July 22. Sell now; the weighted put-call ratio for DOCU is no longer on a buy signal.

Long 4 ATAI (Aug. 15) 2.5 calls: Stop out if shares of ATAI $(ATAI)$ close below $3.25 on any day.

Long 5 OPEN (Aug. 15) 2.5 calls: Stop out if OPEN $(OPEN)$ closes below $1.75 per share.

Long 1 SPY (Aug. 22) 535 put: This was bought because of the breadth oscillator sell signals. Those signals are now in jeopardy. Sell this put to close the position now.

Long 1 SPY (Sept. 19) 635 put and short 1 SPY (Sept. 19) 595 put: This position was bought in line with the equity-only put-call ratio sell signals. Those ratios remain on sell signals, so continue to hold.

All stops are mental closing stops unless otherwise noted.

Send questions to: lmcmillan@optionstrategist.com.

Lawrence G. McMillan is president of McMillan Analysis, a registered investment and commodity trading advisor. McMillan may hold positions in securities recommended in this report, both personally and in client accounts. He is an experienced trader and money manager and is the author of "Options as a Strategic Investment." www.optionstrategist.com

MW How options trading in Palantir, Uber and Fortinet offers clues to the stocks' postearnings moves

By Lawrence G. McMillan

Key market indicators currently point to more upside for the S&P 500

Palantir Technologies (PLTR) reported earnings this week, and the option market had anticipated a strong move. Option traders priced the near-term straddle at 19.25 points, or 12%. That is, they were expecting a large gap move after the earnings. They were overly optimistic. Granted, the stock did move that far in the next two days, after reporting strong earnings, but the one-day move was 13 points.

Uber Technologies (UBER) was another highly anticipated earnings report. Here, the options market was looking for a move of 6.5 points, or 7.2%. Instead, UBER barely moved after the earnings. That is now two quarters in a row where UBER's post-earnings move was small. Perhaps the analysts have figured out how to correctly predict the company's earnings.

One earnings report where the option market underpriced the projection, was Fortinet (FTNT). The company reported earnings after the close on Wednesday and it was a large miss. The stock is cratering in Thursday trading. The option market had priced the straddle at 9.50 or 9.7%. Thus, in this case, buying the straddle was a profitable move.

We generally compare the current straddle price to the stock's previous post-earnings moves. For example, that FTNT straddle price (9.7%) was cheaper than six of the past 10 post-earnings moves, so the odds were slightly in your favor if you bought the straddle. With Uber, the 7.2% straddle price was only cheaper than four of the past 10 post-earnings moves, so it wasn't a good purchase. Palantir was right in the middle, as its straddle price of 12% was cheaper than five of the past 10 post-earnings moves: basically a coin-flip.

Looking at the broader U.S. market conditions, the S&P 500 Index SPX seemed heading into a correction last week, but the downswing lasted just a couple of days before the rally resumed. There is now solid support at 6,200 - tested twice during the last month of trading. There is also support below there, at 6,150 - the previous all-time highs of February. If SPX should decline below 6,150, that would likely bring in heavier selling. This doesn't seem likely soon, so the SPX chart remains bullish with solid support at 6,150-6,200.

There were some recent sell signals, but the market (SPX) is ignoring them pretty much so far. A McMillan volatility band (MVB) sell signal was confirmed when SPX traded down through 6,316 on August 1, and it remains in effect. It is marked with a green "S" on the SPX chart above. It would be stopped out if SPX were to close above the +4<SIGMA> "modified Bollinger band" (mBB), which is nearing 6,500 and rising.

In addition, the equity-only put-call ratios rolled over a couple of weeks ago and began to rise. That is bearish for stocks, and so this indicator remains bearish, as these ratios are steadily climbing. This sell signal would only be reversed if these ratios peaked and began to trend lower.

Market breadth had also weakened to the point where both breadth oscillators generated sell signals. After that, the stocks-only breadth oscillator descended into oversold territory and has now improved enough to generate a buy signal. The NYSE-based breadth oscillator, however, remains on a sell signal. So, with the category being somewhat mixed, it is considered to be a neutral indicator at the moment.

New lows outnumbered new highs on the NYSE for just one day. That is not enough to stop out this buy signal, which has been in place since late June. It would take two consecutive days of new lows exceeding new highs in order to trigger a stop.

Realized volatility, as measured by the 20-day historical volatility of SPX (HV20), had fallen to 6% when the market was rising steadily. But recent action has elevated HV20 to 10%. That is a new sell signal for stocks. This indicator has a spotty track record, but when it is right, it is normally right in a big way. For example, it gave a sell signal in December 2023, which was not a productive trade. But then it also gave a sell signal in July 2024, which was. Those were the two most recent signals.

Unrealized volatility - as measured by the VIX VIX - jumped higher briefly last week when SPX sold off. But it has since fallen back towards 16. This has created a new "spike peak" buy signal, which was confirmed on August 4. It will remain in effect for 22 trading days, but it would be stopped out if VIX were to close above its most recent peak of 21.90. This new signal is marked with a green "B" on the accompanying VIX chart.

In addition, the trend of VIX buy signal (for the stock market) remains in effect. It began back in early June and would be stopped out if VIX were to close above its 200-day moving average for two consecutive days. That has not happened yet, although it did close above it for one day recently.

The construct of volatility derivatives has retained a bullish outlook for stocks throughout the recent correction period. The term structures of both the VIX futures and the Cboe volatility indices continue to slope upward. Moreover, the VIX futures are trading at a healthy premium above VIX. The weighted futures calculation that we compute, VOLFUTA, stands at 1.90 - well above any level that would warrant caution.

So, we remain overall bullish in that the SPX chart is bullish with strong support. Additionally, several of our indicators remain on buy signals. Recently, however, a few sell signals have crept into the picture, and they should be acted upon as well. Each trading signal has its own targets and stops. In any case, continue to roll deeply in-the-money options in order to lock in some profits and reduce risk of a stock market reversal.

New recommendation: VIX 'spike peak' buy signal

As noted in the market commentary above, there has been a new VIX "spike peak" buy signal.

Buy 1 VIX (Sept. 19) at-the-money call and sell 1 VIX (Sept 19) call with a striking price 20 points higher.

This trade will be held for 22 trading days from the time of the original signal (August 4). It would be stopped out if VIX were to close above its recent peak price of 21.90.

New recommendation: Hewlett-Packard Enterprise (HPE) puts

There is a new put-call ratio sell signal in HPE. The stock has already broken down below support. Buy 4 HPE (Nov. 21) 20 puts in line with the market.

As usual, we will hold these puts as long as the put-call ratio sell signal for HPE is in place.

Follow-up actions:

All stops are mental closing stops unless otherwise noted.

We are using a "standard" rolling procedure for our SPY SPY spreads: in any vertical bull or bear spread, if the underlying hits the short strike, then roll the entire spread. That would be roll up in the case of a call bull spread or roll down in the case of a bear put spread. Stay in the same expiration and keep the distance between the strikes the same unless otherwise instructed.

For outright long options, roll if they become 8 points in-the-money.

Long 2 APH (Aug. 15) 100 calls: Roll up and out to the APH (APH) (Sept. 19) 110 calls. The closing stop remains at 101.

Long 1 TSEM (Aug. 15) 50 call: Roll these calls up and out to the TSEM (TSEM) (Sept. 19) 49 calls. Roll up again at 55.

Long 0 SPY (Sept. 19) 635 call and short 0 SPY (Sept. 19) 685 call: This is the position based on the differential between implied and historical volatility. It was stopped out on August 1, when SPY closed below 626.

Long 0 SPY (Aug. 22) 635 calls: This position was bought in line with the cumulative volume breadth (CVB) buy signal. It was stopped out on August 1, when SPY closed below 626.

Long 1 SPY (Aug. 15) 625 call and short 1 SPY (Aug. 15) 640 call: This position is the trend of VIX buy signal. Stop out if VIX closes above 20 for two consecutive days.

Long 0 SPY (Aug. 22) 635: this is the remnants of the most recent "spike peak" buy signal. It was stopped out on August 1, when VIX closed above 18.03.

Long 5 SVXY SVXY (Aug. 15) 44 calls: We monitor the weighted VIX futures premium via a proprietary calculation. Specifically, the calculation is currently at 1.79. This trade would be stopped out if it drops to 0.50 or lower. We will update the calculation weekly.

Long 1 SPY (Aug. 29) 625 call and short 1 SPY (Aug. 29) 645 call: We will hold until new lows outnumber new highs on two consecutive days on the NYSE.

Long 1 AAPL (Aug. 15) 210 call and short 1 AAPL (Aug. 15) 225 call: We will hold as long as the weighted put-call ratio for AAPL (AAPL) remains on a buy signal.

Long 3 DOCU (Aug. 15) 80 calls: These were bought when DOCU (DOCU) shares closed above $80 on July 22. Sell now; the weighted put-call ratio for DOCU is no longer on a buy signal.

Long 4 ATAI (Aug. 15) 2.5 calls: Stop out if shares of ATAI (ATAI) close below $3.25 on any day.

Long 5 OPEN (Aug. 15) 2.5 calls: Stop out if OPEN (OPEN) closes below $1.75 per share.

Long 1 SPY (Aug. 22) 535 put: This was bought because of the breadth oscillator sell signals. Those signals are now in jeopardy. Sell this put to close the position now.

Long 1 SPY (Sept. 19) 635 put and short 1 SPY (Sept. 19) 595 put: This position was bought in line with the equity-only put-call ratio sell signals. Those ratios remain on sell signals, so continue to hold.

All stops are mental closing stops unless otherwise noted.

Send questions to: lmcmillan@optionstrategist.com.

Lawrence G. McMillan is president of McMillan Analysis, a registered investment and commodity trading advisor. McMillan may hold positions in securities recommended in this report, both personally and in client accounts. He is an experienced trader and money manager and is the author of "Options as a Strategic Investment." www.optionstrategist.com

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August 07, 2025 14:58 ET (18:58 GMT)

MW How options trading in Palantir, Uber and -2-

(c)McMillan Analysis Corporation is registered with the SEC as an investment advisor and with the CFTC as a commodity trading advisor. The information in this newsletter has been carefully compiled from sources believed to be reliable, but accuracy and completeness are not guaranteed. The officers or directors of McMillan Analysis Corporation, or accounts managed by such persons may have positions in the securities recommended in the advisory.

-Lawrence G. McMillan

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