MW Tech earnings, silver's rebound and a Cathie Wood ETF offer a high-stakes pivot for investors

By Lawrence G. McMillan

S&P 500 is stuck in a trading range and the market is eager for a breakout - up or down

The option market is expecting some potentially volatile moves after next week's earnings.

Next week is another big one for earnings. Perhaps the most-watched of these among tech stocks is Broadcom $(AVGO)$. Others include Alibaba Group Holding (BABA) and Marvell Technology $(MRVL)$. In the economically sensitive retail sector, earnings to note include Gap Stores $(GAP)$, Abercrombie & Fitch $(ANF)$ and Target (TGT) - all of which have had a history of moving up after earnings reports. While they don't move every time, it's frequent enough to be of interest.

The table below shows some of the major stocks with increased implied volatility. That is, the option market is expecting a potentially volatile move after the earnings.

Our approach is to attempt to buy the shortest-term straddle possible (generally the one expiring on the Friday after the earnings reporting date) and to exit at the close of the first full day of trading after the earnings have been reported.

Specifically, the columns in the table (from left to right) are:

Date: The earnings reporting date,

Pm?: Whether the earnings are to be reported before the market opens ("N") or after the market closes ("Y")

Symbol: The stock symbol

Needed: The most that we would pay for the near-term straddle, with the price of the straddle expressed as a percentage of the underlying stock price. In reality, this is the percentage move that is smaller than six of the past 10 post-earnings moves in this stock.

Optvol: The 20-day average of total option volume on this stock. Low numbers here indicate a potentially illiquid situation.

   Date    Pm?  Symbol   Needed  Optvol 
   3/2/26  Y    CRDO     10.11%  16,619 
   3/2/26  Y    MDB      16.91%  9,562 
   3/3/26  N    BBY      4.89%   8,318 
   3/3/26  N    SE       8.21%   7,282 
   3/3/26  N    TGT      6.33%   35,869 
   3/3/26  Y    CRWD     5.76%   38,803 
   3/4/26  N    ANF      9.23%   2,527 
   3/4/26  Y    AVGO     8.64%   249,636 
   3/4/26  Y    OKTA     7.83%   7,481 
   3/5/26  N    BABA     5.86%   138,439 
   3/5/26  N    CIEN     9.24%   3,924 
   3/5/26  N    KR       3.09%   9,862 
   3/5/26  N    M        3.36%   8,861 
   3/5/26  Y    COST     1.91%   30,833 
   3/5/26  Y    GAP      8.23%   7,525 
   3/5/26  Y    IOT      13.04%  7,297 
   3/5/26  Y    MRVL     9.16%   48,766 

As an example, consider AVGO. In the table, it shows the "count" as 8.64%. That means if we can buy the March 6 at-the-money straddle for 8.64% of the stock price or less, we should. The at-the-money AVGO (Mar. 6) 310 straddle traded on Wednesday for about 11% of AVGO's stock price, so this straddle would not be a buy, though straddles often become a bit cheaper as the actual earnings date approaches.

Silver rings a bell

There is a new weighted put-call ratio buy signal in the iShares Silver Trust SLV. The last buy signal in November turned out to be an excellent one, so we are going to get back on board again now. The precious-metals story has been well-documented in the financial (and other) media, especially since the metals pretty much "crashed" at the end of January. We were able to weather that storm by continually rolling the options higher as SLV rallied strongly last December and January. That will be our approach again this time, if SLV begins to escalate.

There is one big difference in silver options now versus in November: price. Silver options are expensive. The way to partially counter expensive options is with a bull spread, so that is what we are going to use for this recommendation:

Buy 2 SLV (Mar. 20) at-the-money calls and Sell 2 SLV (Mar. 20) calls with a striking price 15 points higher.

That should result in a price of about 5.0 points per spread. We will hold these spreads as long as the put-call ratio is on a buy signal for SLV. Roll both sides up if SLV trades at the higher strike in the spread.

New recommendation: ARK Innovation ETF (ARKK)

ARK Innovation ARKK and ARK Invest CEO Cathie Wood are widely followed. It had a massive setback in the bear market of 2022 and still hasn't fully recovered. Now a put-call ratio buy signal has emerged. The last two buy signals - marked on the chart below - were successful, although the one a year ago was far more of a success than the one this past December. In any case, pessimism abounds, and put buyers have been active. Our put-call ratios are contrary indicators, so when there is too much pessimism, it is time to buy the stock or buy call. That is the case now.

Buy 2 ARKK (Apr. 17) at-the-money calls in line with the market.

We will hold the calls as long as the weighted put-call ratio for ARKK remains on a buy signal.

Stock market insight: Stuck in the middle

The S&P 500 Index SPX continues to trade in a range between essentially 6,720 and 7,000. In the past couple of weeks, it's even been in a slightly tighter range between about 6,800 and 6,950. Traders are approaching this in one of two ways: Swing traders attempt to sell the top end of the range and buy the lower end. That works until there is a strong breakout from the range. Conversely, momentum traders are waiting for that breakout, hoping to get on board for a strong ride upward on a close above 7,000 or a sharp slide downward on a close below 6,720.

Equity-only put-call ratios continue to rise, as a large amount of hedging (buying puts for protection) seems to be taking place while SPX trades sideways in a range. As long as these put-call ratios are rising, that is negative for stocks. Although, there is an old saying "An overhedged market always rises." That might eventually turn out to be the case here.

Market breadth has been mixed. In fact, our two oscillators are split, with the NYSE-based oscillator being on a sell signal, while the "stocks only" oscillator is on a buy. Cumulative breadth has made new all-time highs this week, though, and that is a positive thing for the market in general. Also, cumulative volume breadth, using NYSE data, made a new all-time high. Generally, when these cumulative breadth indicators are making new highs, SPX will follow along and do the same, eventually.

On the NYSE, new highs continue to dominate new lows. This has been going on since just after Thanksgiving, and this indicator remains one of our most bullish.

The volatility indicators have continued to show a bit of worry, though. First, of all, VIX VIX has been rising since December. Maybe that's just more of the hedging activity, but it has now produced a trend of a VIX sell signal for the stock market. This is partially countered by the "spike peak" buy signal of Feb. 5.

The construct of volatility derivatives got a little "worried" last week but has returned to a fully bullish outlook for stocks. The terms structures are sloping upwards, and the VIX futures are trading at a premium to VIX.

So, little about the market has really changed this week. SPX remains in a trading range, and the indicators are mixed as a result. We continue to await the breakout from this range, for a momentum trade.

Follow-up action:

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.

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

Long 1 TSEM (Mar. 20) 140 call and short 1 TSEM (Mar. 20) 155 call: Roll up both sides, 15 points each, if TSEM $(TSEM)$ trades at $155.

Long 1 BMO (June 18) 130 call and long 1 BMO (June 18) 130 put: Continue to hold this straddle. Roll the calls up if BMO $(BMO)$ trades at $150 and roll the puts down if it trades at $110.

Long 6 AAL (Mar. 20) 14 puts: We will continue to hold as long as the AAL $(AAL)$ put-call ratio is on this sell signal.

Long 1 LH (Mar. 20) 280 call: We will hold the call as long as the put-call ratio for LH $(LH)$ remains on a buy signal.

Long 3 ERAS (Mar. 20) 12.5 calls: Raise the ERAS $(ERAS)$ closing stop to 11.80.

Long 1 expiring SPY (Feb. 27) 688 call and short 1 SPY (Feb. 27) 708 call: This is the position that was based on the "spike peak" buy signal of Jan. 21. Exit this position now, since it has been held for more than 22 trading days.

Long 1 SPY (Mar. 20) 692 put and short 1 SPY (Mar. 20) 652 put: This is the position based on the recent breadth oscillator sell signal. Market breadth has improved, so this position should be closed.

Long 0 CSCO (Mar. 20) 82.5 calls: These CSCO $(CSCO)$ calls were stopped out on Feb. 23.

Long 1 SPY (Mar. 20) 688 call and short 1 SPY (Mar. 20) 708 call: the trading system that we have built around these spike peaks calls for holding the position for 22 trading days (about a month), but it would be stopped out if VIX were to close above 23.10 - its most recent peak.

Long 1 BKR (July 17) 65 call and long 1 BKR (July 17) 60 put: Roll the BKR $(BKR)$ call up at 75, and roll the put down at 50.

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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February 26, 2026 17:55 ET (22:55 GMT)

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