“For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance…We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension. If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.

     -Fed Chairman Jerome Powell in remarks to Economic Club of Chicago, April 16, 2025

The holiday-shortened April standard expiration week was a win for bears, who were in control for the seventh time in 10 weeks. Much of this was thanks to Wednesday’s price action, which appeared to be a one-two punch of option-related selling Wednesday morning (following the SPDR S&P 500 ETF Trust (SPY – 526.41) close below the put-heavy 540 strike) and Jerome Powell’s comments in the early afternoon that didn’t exactly spur traders into a buying frenzy.

“Just as the level that marked the all-time high in February was 20% above the August 2024 low, might the level that is 20% below the all-time closing high mark ‘The Bottom’ or at least a ‘significant trough’ for the time being?... The 5,400-5,450 area is an overhead area to watch, as this is where closes were prior to… gaps lower this month. This is in addition to being a key support level in July and September last year.”

    -Monday Morning Outlook, April 14, 2025 

Despite the down week, there was no additional damage relative to what had already been done in prior weeks from a chart perspective. In fact, about two weeks have passed since the S&P 500 Index (SPX – 5,282.70) touched the 4,915 level on successive days, which is 20% below the February all-time closing high. It was at this time that President Trump eased on tariffs by pivoting to a pause for most countries, sparking a rally from this key level.

But last week’s high was in the vicinity of 5,450, or in the area between 5,400-5,450 that we marked as a potential first level of resistance in the context of multiple resistance levels overhead. There was only one close above the 5,400-century mark before the index retreated to close the week below 5,300, with an inside day on Thursday. Inside days occur when the daily high is below the prior day’s high and the daily low is above the prior day’s low. An inside day occurred last Tuesday ahead of the Wednesday morning gap lower.

In simplistic terms, the SPX enters this week’s trading 118 points below the lower boundary of its first resistance at 5,400, which is the close ahead of last week’s gap lower and a support level in July and September of last year. And it is 162 points above the August 2024 low at 5,120, which is the first level of potential support -- implying short-term risk is slightly geared in favor of the bears.

Whether the 5,400-5,450 area is retested in the upcoming week or the recent lows in the 4,915-5,120 area, traders will have ample short-term trading opportunities in what could be volatile range trading, as earnings season continues to pick up steam and traders take cues from what is likely to be a continuance of tariff headlines that have preoccupied market participants.

With the SPX higher since its early April low, the Cboe Market Volatility Index (VIX – 29.65) has plunged during this short time span. In fact, it is at a potentially pivotal point, closing last week around the 30 level — or roughly one-half this month’s peak and its March highs. Those anchoring to the recent high may view this as a good time to buy portfolio insurance at a 50% discount, especially after the expiration of April VIX futures options last week and the standard expiration of index and equity options. As such, hedging activity amid continued tariff uncertainty could be a short-term headwind. If the VIX breaks below the 30 level decisively, it might signal that there is little need for portfolio protection, since those typically buying portfolio protection have reduced their equity exposure.

As you key to important SPX levels, the VIX action around this 30 level may cue you in on whether a retest of the lows or a retest of last week’s highs is in store in the immediate days ahead.

Todd Salamone is Schaeffer's Senior V.P. of Research

Continue Reading:

• The Week Ahead: Earnings, Fed Rhetoric Keep the Spotlight
• Indicator of the Week: Best & Worst Stocks to Own the Week After Easter

Subscribers to Schaeffer's Weekend Trader options recommendation service received this KR commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

An unwinding of pessimism could provide tailwinds as well. There is upgrade potential, as nine of the 20 analysts in coverage carry a “hold” or worse rating. Furthermore, short interest remains 322% higher than the levels in November 2024, representing 5.8% of the stock’s available float. It would take shorts over five days to cover, at Kroger stock’s average pace of trading.

Stocks are mixed this afternoon, following Federal Reserve Chair Jerome Powell’s warning that President Donald Trump’s tariffs could fuel inflation and complicate the central bank’s goal of promoting maximum employment and stabilizing prices. The Dow Jones Industrial Average (DJI) is leading losses amid UnitedHealth Group (UNH) stock's steep post-earnings drop, while the S&P 500 Index (SPX) is modestly higher, and the Nasdaq Composite (IXIC) is flat. For the week, all three major benchmarks are eyeing losses.

Meanwhile, Wall Street’s "fear gauge," the Cboe Volatility Index (VIX), is back above 30, though still on track for a weekly loss. Markets will be closed tomorrow to observe Good Friday.

Continue reading for more on today's market, including: 

• Behind Hertz stock's historic price action.
• Upbeat weight loss drug data boosts Eli Lilly Stock.
• Plus, UNH options explode; FIS rallies on billion-dollar deals; and HUM sinks as healthcare sector slides.

UnitedHealth Group Inc (NYSE:UNH) stock is seeing elevated options activity as the stock plunges after earnings. So far today, 150,000 calls and 118,000 puts have traded hands -- 21 times the average intraday volume. The April 490 call is the most active by far, followed by the April 450 put, with positions being opened at both ahead of today’s expiration. UNH was last seen 22.2% lower at $455, pacing for its worst week since March 2020 after the insurance giant announced a first-quarter profit miss and cut its annual profit forecast due to higher-than-expected medical costs in its privately run Medicare plans. Down 9.8% in 2025, UNH breached support at its 30-day moving average earlier.

Fidelity National Information Servcs Inc (NYSE:FIS) is outperforming on the SPX today, last seen 7.2% higher to trade at $73.60, following news that the company will acquire Global Payments’ (GPN) Issuer Solutions business in a $13.5 billion deal. In addition, GPN bought payments processor Worldpay from private equity name GTCR and Fidelity National Information for $22.7 billion. FIS now sports a 4.3% year-over-year lead.

Humana Inc (NYSE:HUM) stock is one of the worst-performing SPX components this afternoon, last seen 7.1% lower at $265.52. The stock is getting dragged down alongside the broader healthcare sector after UNH’s post-earnings slide. HUM is now hovering near its year-to-date breakeven level and has shed 18% over the past 12 months.

At Schaeffer’s, we use a variety of indicators in our writing to describe stock and trader behavior. While some of these terms may seem confusing at first, they’re actually easy to understand — and can offer valuable insight for options traders. Below, we’ll break down a few of the most common terms you’ll see in our coverage at SchaeffersResearch.com.

One of our go-to data points is option volume ratios, derived from information we receive from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). We track the number of puts and calls bought to open across these exchanges and express them as ratios. For example, we might say, “XYZ’s 10-day call/put volume ratio at the ISE, CBOE, and PHLX is 2.50.” This means that for every XYZ put that's been bought to open during the specified time frame (10 sessions, in this case), 2.50 calls have been bought to open.

Since, based on the above information, long call volume has easily outweighed long put volume, it'd be easy to say that XYZ speculators have been extremely bullish (since they've bought to open more calls) during the past 10 days. However, we like to see how that ratio stacks up against XYZ traders' previous behavior, so we compare it to all other 10-day ratios from the previous year. Therefore, using our hypothetical 10-day ISE/CBOE/PHLX call/put volume ratio of 2.50, we could say something like, "This ratio lands in the 95th percentile of its annual range."

If you’ve ever taken a standardized test, this percentile terminology should feel familiar. A 95th percentile rank indicates an unusually high -- and likely bullish -- level of call buying relative to the past year.

Another favorite metric is the Schaeffer's put/call open interest ratio (SOIR). Unlike volume ratios, which focus on buy-to-open activity, the SOIR includes all open interest -- whether bought or sold. It specifically looks at options expiring within the next three months, helping us gauge the sentiment of short-term traders. Like volume ratios, we use percentile ranks to show how skewed the current setup is toward calls or puts.

The last indicator we'll highlight here is the Schaeffer's Volatility Index, or SVI, which can be particularly useful during earnings season. In the simplest terms, SVI essentially tells us if traders are overpaying or underpaying for a stock's front-month options, from a historical perspective. The SVI averages the implied volatility of front-month options that are at the money. Then, by using a percentile rank, we can determine if those options are seemingly cheap or expensive, from a volatility perspective. So, if you hear us say that "XYZ's SVI of 49% ranks in the 95th annual percentile," you may want to put your money elsewhere, as volatility expectations are historically high. 

To get real-time options updates using these and other indicators, follow @Schaeffer's on Twitter. 

Eli Lilly & Co (NYSE:LLY) stock is headed for its best day since August 2023, last seen up 13.4% at $838.48 at last check, after the pharmaceutical giant reported positive results for a phase 3 trial of its weight-loss drug, orforglipron. The experimental pill resulted in weight loss of nearly 8% at the highest dose, and lowered blood sugar in patients with type 2 diabetes. 

Today's pop helped Eli Lilly stock fully recover from its early April bear gap, and has it back in positive territory for 2025. LLY was overdue for a bounce, as its 14-day relative strength index (RSI) of 30 sits just in "oversold" territory. The shares are now grappling with familiar pressure at the $840 level, which is home to a confluence of long-term moving averages.

Over in the options pits, LLY has seen 45,000 calls and 35,000 puts cross the tape so far today, which is already 8 times the stock's overall average daily options volume. Expiring today, the April 800 put and 900 call are the most popular, with new positions opening at both. 

This penchant for calls shows a shift in sentiment. LLY's 10-day put/call volume ratio of 1.01 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 87% of readings from the past year, showing puts were picked up at a faster-than-usual rate in the last two weeks.