Unusual Options Activity: 3 Long Straddles to Play From Thursday’s Top 100

Yesterday's two big news stories were naming an American-born pope and the trade deal between the U.S. and the United Kingdom.  

As I write this Friday morning before the markets open, the focus for investors today is the China/U.S. trade negotiations taking place this weekend in Switzerland. Should they go well, the White House could reduce the 145% tariff on goods imported from China.

That gives investors hope that the impact of the tariffs and global trade war won’t be nearly as painful as first thought. 

“As we ... find out how much progress the U.S. and China are making towards the most important trade deal this weekend, it should give investors some more clarity about how much of an impact the trade issue will have on the U.S. and global economy going forward,” said Matt Maley at Miller Tabak + Co.

Currently, S&P 500's futures are pointing to a positive opening. 

In Thursday’s unusual options activity, there were 1,291 unusually active options. Of these, 747 were calls, while 544 were puts, a bullish indicator.  

The top 100 Vol/OI ratios ranged from a high of 294.34 for C3.Ai (AI) to a low of 10.60 for Tesla (TSLA). Three of the top 10 are possible long straddles. A long straddle involves buying a call and a put at the same strike price and expiration. The strategy is where you expect a move in either direction, but are unsure which way. Here’s why. 

Have an excellent weekend.

CNH Industrial (CNH)

CNH Industrial (CNH) had the second-highest Vol/OI ratio yesterday of 285.92.

The maker of agricultural and construction equipment’s stock has had its ups and downs in the past year,  but remains in positive territory, up nearly 7% in the past 12 months, and more importantly, up 155% over the past five years. 

CNH is short for Case New Holland, the company’s two leading brands. The two businesses came together in November 1999, when New Holland acquired Wisconsin-based Case for $4.6 billion.  

Its largest shareholder is Exor Holding (EXXRF), who own 26.9% of its stock and holds 45.3% of its voting power. The Agnelli family, one of Italy’s wealthiest families, controls Exor. I’ve long admired the Exor businesses.

Regardless of the near-term issues related to tariffs, CNH competes in two areas (agriculture and construction), where the demand for its products will continue to grow to meet global food and housing needs. 

Of the 21 analysts that cover CNH stock, 12 rate it a Buy, with the other nine on the fence at Hold. The target price is $14, slightly higher than where it currently trades. 

Based on the Dec. 19 $12.50 call, the long straddle has a 34.8% probability of profit with a breakeven of $11.15 on the downside and $13.85 on the upside. 

The net debit of $135 is reasonable at 10.71% of the share price. 

Brookfield Corp. (BN)

Brookfield Corp. (BN) is one of the world’s leading alternative asset managers with over $1 trillion in assets under management (AUM) invested in over 30 countries. North America accounts for 61% of its AUM, with Europe & Middle East (20%), Asia Pacific (14%), and South America (5%) accounting for the rest.  

With such significant AUM, it takes considerable time to thoroughly understand its business and the many ways it delivers value for shareholders. Ultimately, however, it is worth it, because long-time CEO Bruce Flatt runs it well. 

One way to look at its business is through distributable earnings. 

“It is calculated as the sum of the DE from our asset management and wealth solutions businesses, distributions received from our ownership of investments, realized carried interest and disposition gains from principal investments, net of earnings from our corporate activities, preferred share dividends and equity-based compensation costs,” states its 2024 annual report. 

Between 2020 and 2024, they grew from $2.74 to $3.96, a 9.6% CAGR (compound annual growth rate). In 2024, it delivered distributable earnings of $6.3 billion, which includes $2.6 billion from its Asset Management business, $1.4 billion from Wealth Solutions, and $1.6 billion from its Operating Companies. 

Its share price has moved little in 2025. However, over the past 12 months, they’ve gained nearly 29%, three times higher than the S&P 500. If you had invested $1,000 in BN stock 30 years ago, today it would be worth $184,800.

Long-term, it’s a winning proposition. 

Based on the May 16 $55 put, the long straddle has a 33% probability of profit with a breakeven of $51.75 on the downside and $58.25 on the upside. The net debit of $325 is reasonable at 5.6% of the share price. 

Mattel (MAT)

Regarding stocks caught in the crosshairs of the China/U.S. trade war, Mattel (MAT) ranks high on any list. 

The good news is that the toy maker has been weaning itself off China in recent years. In the company’s Q4 2024 conference call, CEO Ynon Kreiz said it now sources products from seven countries, with China accounting for less than 40%. More importantly, that’s about half the toy industry average. 

“And with the US representing about half of our global toy sales, our tariff exposure in the US related to China should be about 20% of global production. And with respect to Mexico and Canada, we currently source less than 10% of our toys from Mexico and have no sourcing from Canada,” Kreiz said.

When the company reported Q4 2024 results in February, it expected sales to rise 2.5% at the midpoint of its 2025 guidance, with earnings per share increasing seven cents to $1.69 from $1.62 in 2024. 

However, it has paused guidance for the remainder of the year. The good news: tariffs didn’t affect its Q1 2025 results. 

While Mattel had two unusually active options yesterday, I’m focusing on the July 18 $17 put expiring in 70 days from today.     

Based on current prices, the $17 call ask price is $1.35, while the ask price for the $17 put is $0.90.  The long straddle has a 34.56% probability of profit with a breakeven of $14.75 on the downside and $19.25 on the upside. The net debit of $225 is 13.0% of the share price. 

Of the three, the Mattel long straddle has the best chance of success. Long-term, all three stocks are worth owning.