Options highlighting momentum shift?

Picture this: Cinemark (CNK) started the week by trading nearly 43 times its average number of call options, giving the movie theater chain the second-highest relative call volume in early trading on Monday:

While that may have simply appeared to reflect bullish sentiment in a stock up more than 3% intraday, CNK’s options chain painted a mixed picture of the activity. Most of the trading occurred in the June expiration, with 4,500-contract trades in both the $32 and $35 calls, and 4,600 contracts in the $34 calls (the stock was trading a little above $33):

Because open interest (OI) in both the $32 and $35 calls was higher than the volume, these traders could have been liquidations—that is, traders selling calls they’d previously purchased. (The fact that there was similar volume in both of these options on May 6 may also support that case.) Also, something similar may have been taking place in the July $32 calls, which had volume of 3,000 vs. OI of 5,200. Either way, today’s OI should clarify the picture: If the totals are higher, traders were opening new positions; if they’re lower, traders were getting out of them.

On the other hand, the June $34 calls had volume of 4,600 vs. OI of 69, which suggests at least some traders may have been opening new positions.

Whether traders were getting in or out of calls assumes more signifiance in light of CNK’s recent price action. The stock is coming off its seventh-straight up week, and is within shouting distance of the five-year high it set last November:

For perspective, CNK has strung together seven positive weeks only four other times since 2007, most recently in 2015. While that suggests the stock has experienced an unusual level of bullish momentum, such a small sample size makes it impossible to read too much into what the stock did after the previous runs. Regardless, the results were mixed: CNK closed higher the following week in two instances, and was higher four weeks later in three.¹

In this case, options activity—specifically, whether OI is increasing or decreasing—may provide greater insight into how confident traders are feeling about the rally.

Market Mover Update: The latest on-again, off-again tariff episode (with the EU) may be a negotiating tactic, according to Morgan Stanley & Co. strategists, but it also “underscores that considerable uncertainty around US trade policy will endure, even if the full implementation of ‘reciprocal tariffs’ flagged on April 2nd has become less likely.”²

JFrog (FROG) has delivered two weeks of mixed performance since giving mixed signals at a conspicuous resistance level. The stock rallied more than 1% yesterday, but it remained in the trading range that followed its jump to a new one-year high on May 14 (see “Mixed signals at resistance level”).

Today’s numbers include (all times ET): FOMC minutes (2 p.m.).

Today’s earnings include: Agilent Technologies (A), C3 AI (AI), Abercrombie & Fitch (ANF), Salesforce (CRM), E.L.F. Beauty (ELF), Guess (GES), Nvidia (NVDA).

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¹ All figures reflect Cinemark (CNK) weekly closing prices, 2007-2025. Supporting document available upon request.
² MorganStanley.com. US Public Policy: FAQs: Tariff Man Meets Tax Man. 5/26/25.