OPTIONS: US Options Roundup - May 30 2025

• US Data/Speaker Calendar (prior, estimate)
• 1-May 0730 Challenger Job Cuts YoY (204.8%, --)
• 1-May 0830 Initial Jobless Claims (222k, 224k)
• 1-May 0830 Continuing Claims (1.841M, 1.865M)
• 1-May 0945 S&P Global US Mfg PMI Final  (50.7, 50.5)
• 1-May 1000 Construction Spending MoM (0.7%, 0.2%)
• 1-May 1000 ISM Manufacturing (49.0, 48.0)
• 1-May 1000 ISM Prices Paid (69.4, 73.0)
• 1-May 1000 ISM New Orders (45.2, --)
• 1-May 1000 ISM Employment (44.7, 45.0)
• 1-May 1130 US Tsy $85B 4W, $75B 8W bill auctions

Pending home sales saw their biggest monthly rise in 26 months in March, halting a recent softening. The National Association of Realtors' Pending Home Sales Index - which is based on contract signings - rose 6.1% M/M on a seasonally-adjusted basis (vs 1.0% expected, 2.1% prior) after plumbing historic lows in the last couple of months. 

• The Y/Y figure was still negative (-0.1%) but far better than expected (-5.7% survey; -7.0% prior).
• Sales picked up in each of the four US regions, with the exception of the Northeast - the South (the largest region for pending sales) led the way with 9.8% M/M growth.
• As a leading indicator for existing home sales, this suggests that downside in residential sales activity may be limited for now.
• Though the basis of comparison is relatively weak, as sales levels are around 30% below pre-Covid and 25% below those seen in the year 2001.
• And the pickup appears to be led by an improvement in mortgage rates, which looks to have reversed in April. Per the NAR: "Home buyers are acutely sensitive to even minor fluctuations in mortgage rates," said NAR Chief Economist Lawrence Yun. "While contract signings are not a guarantee of eventual closings, the solid rise in pending home sales implies a sizable build-up of potential home buyers, fueled by ongoing job growth."

Option desks reported decent SOFR & Treasury option volumes Wednesday, mixed flow segued to downside puts in the second half. Underlying futures firmer, testing highs late (TYM5 +8 at 112-13 vs. -13.5 high). Curves twisted steeper in late trade (2s10s +3.616 at 55.382). Projected rate cut pricing looks steady to lower vs. early morning levels (*) as follows: May'25 at -1.6bp (-2.6bp), Jun'25 at -17.1bp (-16.7bp), Jul'25 at -41.1bp (-38.1bp), Sep'25 -64.8bp (-59.2bp).

• SOFR Options:
  • Block, 10,000 SFRM5 95.75/95.93 put spds, 10.5 ref 95.91
  • -10,000 2QU5 97.25/97.31 call spds 1.5 ref 96.845 (unwind of buys from Apr 4)
  • +3,000 SFRU5 96.50/97.00 call spds 1.75 over 3QU5 96.87/97.25 call spd
  • -2,500 SFRZ5 96.68 straddles, 73.0 ref 96.69
  • 5,200 SFRM5 95.81/95.87 2x1 put spds
  • 6,000 SFRU5 95.68/95.87/96.00 put flys ref 96.30
  • Block, 2,500 SFRZ5/0QZ5 96.25 put spds, 4.5
  • 3,000 0QZ5 99.00/100.0 call spds ref 97.00
  • 2,500 SFRH6 97.25/98.25 call spd vs. 2QH6 97.00/98.00 call spd
  • Block/screen: 7,500 0QM5 97.00/97.25/97.50 call flys
  • 3,000 SFRM5 96.18/96.31 call spds ref 95.90
• Treasury Options:
  • Update, over 33,000 TYN5 108.5/109.5/110.5 put trees ref 112-09.5 to -12.5
  • 12,000 TYM5 110.25/111.5 put spds, 21 ref 112-06.5
  • 1,500 TYM5 109/110 put spds vs. 110.25/111.25 call spds
  • 1,500 TYM5 114/116/118 call flys ref 112-05
  • -19,500 TYM5 114 calls, 18
  • 3,600 TYM5 112.5 straddles, 157 ref 112-09
  • Block, 21,000 FVU5 111/114 call spds 29.5 vs. 109-07.75/0.20%
  • 6,250 FVM5 109.25 straddles ref 109-06.25
  • 9,000 wk3 TY 112.25 puts ref 112-09.5
  • 8,000 wk3 FV 109 puts, 31.5 ref 109-02.75 (exp 5/16)
  • over 8,200 USM5 120 calls & 9,200 USM 124 calls, partially spd
  • 4,000 Wed wkly TY 112.75/113 call spds (exp today)
  • 3,600 TYM5 109/110/111 put flys ref 112-06.5
  • over 12,000 TYM5 114 calls, 17-18
  • 1,250 FVM5 107.5/107.75/108.25 broken put flys ref 109-02.5