Hey,
Charles here.
Tim is new to this column, but his read of the tape is anything but rookie.
He spent the week watching the long end of the curve do something it has not done in a year. And he noticed that when the cost of money rips higher, the market splits in two.
One side gets a tailwind. The other side gets a chokehold.
His picks this week are the cleanest expression of that split he could find: one company that makes more money the second volatility shows up, and one that needs cheap money just to keep the lights on.
Below is Tim's breakdown.
Hi Traders,
I wanted to give you a quick primer with my first Ticker Highlight Show writeup. My process is going to be pretty similar to how I come up with names for my upcoming service.
Top-down macro approach.
I look at the overall themes in the market, drill down into the sectors I like or don't like, and work bottom-up on individual names from there. In the sectors I like, I'll be looking for names that are either ready to break out to the upside or getting an opportunistic dip to buy. Same goes for the short side.
I'll find a sector or segment I don't like and look for a bounce to sell, or a stock that looks like it's about to break down.
Now, here's the setup heading into Tuesday.
The 10-year Treasury yield hit 4.61 percent on May 18, the highest level in a year. The 30-year cracked above 5 percent for the first time in a year. The 30-year fixed-rate mortgage rose to 6.51 percent, the highest reading since August.
It was the sharpest weekly increase in mortgage rates since April 2025.
That's a real macro break.
When the cost of money rips higher, two kinds of businesses react in opposite directions. One kind gets richer because volatility goes up and trading volume goes up. The other kind gets squeezed because every product they sell depends on someone borrowing cheap money to buy it.
One to Love: The Exchange Nobody's Watching
Miami International Holdings (MIAX) is the smallest of the major U.S. options exchanges. It's also the one with the freshest catalyst.
Two things changed in the last two weeks. MIAX Futures Exchange launched Tini Bloomberg 100 Index Futures on May 19, the first equity index futures product in their suite. Then on May 20, the Options Clearing Corporation started clearing and settling MIAX Futures trades.
That's the institutional credibility upgrade. The plumbing is now connected to the big leagues.
Then look at what the broader options industry just did. In January, short-dated Monday and Wednesday expiration cycles were added for eight single stock classes. Volume in these contracts grew to nearly three million contracts per day, with Tesla and Nvidia making up more than half the flow.
Three million contracts per day on a product that did not exist five months ago.
MIAX hit a record 18.2 percent market share in Q4 2025, up from around 15 percent two years ago. Multi-listed options ADV grew 25.4 percent year-over-year in February. They cleared a record 2.4 billion contracts in 2025, a 41 percent jump.
This is the toll-booth business with a growth kicker. The exchange does not care who wins. Every contract that trades, MIAX clips a fee.
More volatility means more contracts. More single-stock short-dated expirations means more reasons to trade. With the 10-year breaking out and equity volatility lifting, the flow is showing up right on schedule.
On May 13th, call options in MIAX printed at 16 times average volume. One-month implied vol sits at 43 percent. MIAX trades at $51.44, pulled back from $57.22.
That's the first dip to buy in two months.
One to Leave: The Bounce in Housing is a Trap
KB Home (KBH) is the cleanest fade in the housing complex.
The Q1 print already showed the cracks. Revenue fell 23 percent year over year to $1.08 billion. EPS dropped to 52 cents from $1.49.
Housing gross margin slid to 15.3 percent from 20.2 percent because the company is cutting prices and stuffing the deal with incentives. Backlog fell to $1.70 billion from $2.20 billion. Management reduced full-year delivery and revenue guidance, citing "a lot of noise out there."
That print landed when the 10-year was around 4.25 percent.
Then rates broke out. The 10-year sits at 4.61 percent today, the highest level in a year. The 30-year fixed mortgage jumped to 6.51 percent, the highest reading since August and the sharpest weekly increase since April 2025.
Mortgage applications for new home purchases plunged 10 percent versus March.
That is a 30 basis point move in the wrong direction since KBH guided. The Q2 update comes in June. Management already said it needed the spring selling season to stabilize.
The spring selling season just got hit with the worst weekly mortgage rate jump in over a year.
The chart agrees. KBH has been weak for 30 days, bouncing the last few sessions on no news. Weak on 30-day, strong on 5-day, strong on 1-day.
That is a bounce to sell, not a bottom to buy.
I do not need the whole sector to crack. I just need this one to give back the bounce. The 6.51 percent mortgage rate is the catalyst nobody wants to talk about.
What I'm Watching Into Tuesday
One pick that gets paid on activity. One pick that gets squeezed by rates.
The bigger question for the week is whether the 10-year keeps grinding higher. If it does, the housing fade has more room and the volatility complex stays bid. If yields snap back on a peace deal or weaker data, the trade goes the other way fast.
I'll be watching the long end of the curve, mortgage applications, and what the homebuilders do on the open Monday. The bounce candidates fail first.
Enjoy the process,
Tim
The split is the trade.
When the cost of money jumps 30 basis points, the exchange business gets a tailwind it didn't earn and the homebuilder gets a hole punched in its guidance. Tim picked the two purest expressions of that split he could find on the tape this week.
The question now is whether the team picks up what he is putting down.
Join the Ticker Highlight Show Premium before Tuesday at 10:30 AM ET to find out.
See you there,
Charles Delvalle
Editorial Director, Option Pit