Conspicuous consumption

While most of the stocks on Tuesday’s LiveAction scan for unusual options activity were companies scheduled to release earnings in the next week or so, one of the higher-profile exceptions was consumer staples mainstay Kimberly-Clark (KMB), maker of Kleenex and Huggies, among other well-known brands:

Around 11 a.m. ET, total options volume was close to nine times average. Later in the session, that number would increase to more than 18 times average, with call volume roughly 20 times average and put volume around 14 times average.

KMB actually announced earnings last Thursday (October 30) to relatively modest fanfare, topping its headline numbers and closing up 3%. But that move was soon lost in the 14.6% sell-off that occurred on Monday as the company announced it was buying Band Aid and Tylenol maker Kenvue (KVUE) for more than $40 billion:

After a brief foray into positive territory, KMB followed through to the downside on Tuesday, dropping shares—which have fallen more than 23% this year—close to $100.

Acquisition announcements like this frequently result in sell-offs—after all, regardless of any long-term benefit, the company doing the buying is poised to take a hit to its bottom line. For traders, the difficult question is whether the market’s initial reaction is overdone.

In the wake of the deal, Morgan Stanley & Co. analysts acknowledged the logic of KMB’s pullback, given what they saw as “a large degree of execution risk with the deal and uncertainty on Kenvue's portfolio (including Tylenol risk).” But the analysts—who have an Equal-weight rating on KMB—also saw the glass as more half full than half empty, citing the company’s progress in recent quarters, and the fact that the pullback dropped shares to roughly 12 times earnings.¹

A long-term chart shows the sell-off also dropped KMB relatively close to its April 2018 low, which is essentially the lowest boundary of what has arguably been a choppy, multi-year consolidation:

Low enough for traders and investors to anticipate a potential return toward the upper portion of that range? That remains to be seen, and options positioning is a work in progress. On Tuesday there were few unusually large individual trades in options expiring in 2025 (most were less than 1,000 contracts), and in most cases volume was less than open interest (OI), which makes it impossible to know in real time whether traders were getting in or out of positions. One exception: 1,000 contracts changed hands in the December $115 calls, which had OI of only 54 on Tuesday.

Today’s numbers include (all times ET): mortgage applications (7 a.m.), ADP Private Employment Report (8:15 a.m.), PMI Composite (9:45 a.m.), ISM Services Index (10 a.m.), EIA Petroleum Status Report (10:30 a.m.).

Today’s earnings include: AppLovin (APP), Arm (ARM), DoorDash (DASH), Duolingo (DUOL), E.L.F Beauty (ELF), Five9 (FIVN), WK Kellogg (KLG), Lemonade (LMND), Lyft (LYFT), McDonald's (MCD), Murphy Oil (MUR), Novo Nordisk (NVO), Qualcomm (QCOM), Royal Gold (RGLD).

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¹ MorganStanley.com. A Strategic Huggie: KMB's Transformational Step into Consumer Health. 11/4/25.