Chips on or off the table?
- GFS call options volume 26x avg. on Thursday
- Stock rallied 16.3% on Wednesday
- OI totals will show if traders trimmed positions
There’s something about big price moves that can make traders and investors overlook other market information that may be telling a different—or at least more nuanced—story.
On Thursday, GlobalFoundries (GFS), a company that specializes in manufacturing semiconductors for the non-AI segment of the market (PCs, smartphones, etc.), saw its call options volume running at more than 26 times the average rate—one day after its stock enjoyed a 16.3% earnings rally:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
It was certainly a bullish-looking scenario, but traders who scratched below the surface may have formed a more balanced opinion of it.
First, while Thursday’s 4.6% intraday rally temporarily boosted shares to their highest level in roughly 18 months, the stock also reversed to end the day lower. The chart also shows that as recently as late November the stock was trading less than $2 above the record low close it set last April.
Second, the call options volume was somewhat ambiguous in that the big trades—nearly 35,000 contracts—all occurred in contracts with high open interest (OI):
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Because the OI in each of the contracts was greater than the volume, it’s possible that traders were getting out of existing trades. We’ll know, one way or the other, depending on whether Friday’s OI totals are higher or lower than they were on Thursday. If they’re lower, it suggests traders may have been exiting, or at least scaling back, their positions.
Finally, on the fundamental side of the equation, after the earnings announcement Morgan Stanley & Co. analysts retained their positive view on GFS positioning in the foundry space, but they also believed weakness in GFS’s bread-and-butter markets (e.g., PCs, smartphones, consumer electronics, appliances) could keep a lid on pricing in 2026, and that the company’s exposure to those areas was growing.1 (The analysts maintain an Equal-Weight rating on the stock.)
Big price moves can stir emotions, but emotions are a poor basis for making trading or investing decisions. Paying attention to the details outside the big move’s spotlight can help provide a clearer picture of what’s happening in the market at a given time.
Market Mover Update: Tech may have led Thursday’s market decline, but software wasn’t the primary culprit this time. Three other industries—IT Services, Computers & Peripherals, and Communications Equipment—were the weakest components of the S&P 500 tech sector. Software was its second-strongest industry (although it lost ground), behind Electronic Equipment.
Today’s numbers include (all times ET): Consumer Price Index (CPI).
Today’s earnings include: Advance Auto Parts (AAP), Moderna (MRNA), Tower Semiconductor (TSEM).
Click here to log on to your account or learn more about E*TRADE's trading platforms, or follow the Company on Twitter, @ETRADE, for useful trading and investing insights.
1 MorganStanley.com. Results broadly in-line, revenue drivers broadening out. 2/12/26.