The S&P 500 headed into this week’s final trading day on a five-day losing streak. Yesterday’s positive manufacturing data suggested interest rates might not get cut in September at the next Federal Reserve meeting. However, Jerome Powell's speech this morning in Wyoming indicated that interest rates were coming. The markets are all up significantly in early afternoon trading as a result. 

In yesterday’s unusual options activity, there were 566 calls and 477 puts for a put/call ratio of 0.84, which I would characterize as neutral in investor sentiment. 

Of the 1,043 unusually active options, there were just three with a Vol/OI (volume-to-open-interest) ratio of 100 or higher. That’s indicative of a slower-than-normal options volume. Sure enough, yesterday’s total volume was 44.1 million, well below the daily average of 50.4 million.

Despite the slow options market, there were some interesting, unusually active calls and puts to consider for today’s commentary. Here are three that stood out for me. 

Have an excellent weekend!

First Horizon (FHN)

The Memphis-based regional bank had the second-highest Vol/OI ratio at 126.14. The total options volume yesterday was 55,762, 4.4 times higher than its 30-day average. The volume for the Jan. 16/2026 $24 call accounted for nearly 57% overall.  

If it weren't for First Horizon’s (FHN) long and drawn-out sale and subsequent cancellation by Canada's Toronto Dominion Bank (TD), I probably wouldn't pay any attention to the regional bank stock. However, given my familiarity with the whole TD debacle, the second-highest Vol/OI ratio definitely caught my attention.

First, before getting into why this particular call’s volume was unusually active, let’s consider the strike’s sales activity yesterday. 

One trade at 10:27 in the morning accounted for 30,000 (95%) of the 31,661 volume yesterday. Whoever placed the trade forked over $2.55 million for the right to buy three million FHN shares in the future. The ask price of $0.85 was just 3.9% of the share price. Anything under 5% is an excellent use of leverage. 

Now, as you already are aware, there are two sides to every trade: a buyer and a seller. Someone who already owned three million shares of First Horizon could have done a covered call to generate income. However, the approximately 14.4% annualized return wouldn’t be my idea of a sure thing despite a 58.3% profit probability. 

On the other hand, we don’t know what price the owner of these 30,000 shares might have paid. In 2023, they traded under $10. If that’s the case, being forced to sell at $24 in 149 days isn’t the end of the world. 

Conversely, the seller might not own the shares and is looking to make a quick buck on a naked call, closing the position well before January. 

As for the long call buyer, the bank reported Q2 2025 results that exceeded analyst estimates on the top and bottom lines. Further, 10 of 17 analysts rate it a Buy (4.06 out of 5) with a 12-month target price of $23.70, above where it’s currently trading. 

It’s an interesting bet by either side. 

Oklo (OKLO)

Oklo (OKLO) had six unusually active options yesterday. However, it is the two puts at the top that I’m focused on. Both in the top 20, in 18th ($57 strike) and 19th ($61 strike) spots, both sides of the trade make sense. Here’s why.   

If you were selling either of the puts yesterday, you were looking to generate a little income. The annualized return for the former is 37.1%, while the latter’s annualized return is 47.7%. Both are very attractive returns. With eight days until expiration and well out of the money, the profit probability is between 80% and 90%. 

If you were buying either of the puts, you were looking to protect your profits. OKLO stock is up 216% in 2025 and nearly 900% in the past 12 months. The nuclear technology company is due for a cooldown. 

It’s hard to fault investor reasoning on either side of the trade.  

PayPal (PYPL)

PayPal (PYPL) had four unusually active options yesterday. It is the Sept. 19 $69 call in the 24th spot that’s of interest to me.  

OTM (out-of-the-money) by just 2.15%, an ask price just 2.6% of its $67.55 closing share price, and 29 days to expiration, it’s a reasonably low-cost, low-risk investment. Sure, the profit probability is less than 30%, but PayPal stock remains an intriguing bet despite the stock continuing to disappoint long-time shareholders. 

For example, in June 2024, I considered two puts to sell that were ITM (in-the-money) to generate income. However, because one of the puts had a DTE of 720 days (June 18/2026 expiry), I suggested that the Aug. 16/2024 $50 put expiring in 49 days was the way to go. 

The idea was to keep rolling over the $50 put to generate income until the shares experienced a correction, enabling you to buy in at a better entry point. At the time, its shares were around $58. 

“The annualized return of the Aug. 16 $50 put is 7.4%. Except for a brief period last October, it hasn’t traded below $50 in the past year. You might keep rolling over a $50 strike every seven weeks in the off chance there’s a correction in the next 6-12 months,” I wrote at the time. 

Its shares never did fall below $50, hitting a 2-year high of $93.66 on Dec. 9, 2024. Its shares are down 28% in the eight months since, but still higher than they were in June 2024. 

So, if you bought the Sept. 19 $69 call, the probability of breaking even was 29.27%.     

Whereas, if you did a covered call, your profit probability was 62.0%, with an annualized return of 32.9%. The expected move in either direction is $3.91. 

So, if the shares dropped $3.91 from $67.55, you would have an unrealized loss of $2.19 [$67.55 share price - $3.91 decline in share price + $1.72 bid price (premium)]. If they increased by $3.91, your profit would be capped at $3.17 [$69 strike price - $67.55 share price + $1.72 bid price (premium)], a 4.8% return, and your shares would be called away.