Options make noise in quiet stock

Over the past five months or so, trucking company Knight-Swift Transport (KNX) hasn’t done much, at least compared to the broad market. While as of Tuesday the stock was up more than 17% from its April low close of $38.16, that was about 12 percentage points less than the S&P 500’s (SPX) rally off its April low.

KNX’s bounce over the past couple of weeks pushed shares to their highest level in nearly a month, but they’re still more or less in the middle of the trading range they’ve been in since the stock retreated roughly 38% from its January high of $61.51:

In other words, the stock’s story for the past few months could be summarized as “nothing much to see here.” (Morgan Stanley & Co. maintained an Overweight rating on the stock after last month’s earnings announcement.¹)

The stock did rally more than 3% intraday on Tuesday, though—worth noting given the wider market’s tepid performance. Still, the move probably wouldn’t have attracted much attention if not for volume of nearly 13,000 contracts in the September $47.50 calls:

While trades occurred throughout the day, most of the activity (around 10,000 contracts) took place over the course of two minutes, which suggest that at least one large trader may have been establishing a position. Of course, the question in such situations is invariably, “Is the position bullish or bearish?” Just as invariably, the answer is, “It’s impossible to know.”

But the trade’s timing and the option’s strike price have a few potential implications. Most importantly, since the options expire on September 19, yesterday’s trade has only short-term implications. Even if the trader responsible for the heavy volume held the position until expiration, that’s only 17 trading days away.

That short time frame may help explain the closeness of the strike price, which yesterday was just a little more than 6% above the stock price. To put that in perspective, KNX’s average (absolute) 17-day percentage price change since April 30 is 6.3%, and 32 of its 17-day moves since then were bigger than +/-6.3%.

Of course, the trader isn’t obliged to hold the options until expiration. In fact, one could make the case that a trader who bought the calls would not want to hold them that long, since time decay typically accelerates in the final two to three weeks of an option’s life, eating away at the contract’s value, all else held equal.

Given a moderate (by recent historical standards) 17-day rally would simply push the stock to the vicinity of the call’s strike price (with the option losing time value every day), it could be argued that a trader who bought the calls yesterday was expecting a near-term rally in the stock. Of course, if the trader sold those calls, it implies a more aggressive neutral-to-bearish outlook, since sellers will profit (at expiration) only if the stock is below the strike price.

Today’s numbers include (all times ET): mortgage applications (7 a.m.), EIA Petroleum Status Report (10:30 a.m.).

Today’s earnings include: Agilent Technologies (A), American Eagle Outfitters (AEO), Abercrombie & Fitch (ANF), Bill Holdings (BILL), Campbell’s (CPB), CrowdStrike (CRWD), Five Below (FIVE), HP (HPQ), Lululemon (LULU), Nvidia (NVDA), J.M. Smucker (SJM), Snowflake (SNOW), Ulta Beauty (ULTA), Urban Outfitters (URBN).

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¹ MorganStanley.com. 2Q Shines; Glow Should Extend to 2H As Well. 7/24/25.