Contrarian Picks to Monitor Amid Broader Market Pop

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Last week at Schaeffer’s we did a rundown of some of our 44th Anniversary Stock Picks, zeroing in on three sectors that options traders should buy (and hold) for the second half of the calendar year. Nuclear energy, cryptocurrency, and liquified natural gas made the list, alongside many others that are also seeing bullish-leaning outlooks.

However, here at Schaeffer’s, we love to play devil’s advocate, aka contrarians. Chosen and written at the same time as our bullish 44th anniversary picks, our team of top traders gathered a handful names worth keeping an eye on for bears. Below, you’ll find three picks, plus some updates on recent price action and how the latest news cycle is impacting sentiment.

Don’t Waste Your AI Bets on This Overbought Newbie

Excerpt: Data center and artificial intelligence (AI) stock Circle Internet Group (CRCL) traded as high as $298.99 on June 23, a stellar debut after opening at $69 on June 5. But as the company’s market cap – currently at $55 billion -- approaches its actual stablecoin USDC valuation of $62 billion, it’s hard to imagine Circle’s valuation is greater than the sum of its total assets. This is since Circle makes money off yields by buying treasuries and junk bonds, plus payout yields to holders.

It’s best to look for some sort of confirmation before shorting blindly, especially with short-term options traders continuing to roll calls higher, but CRCL could very well hockey stick on the charts after the debut euphoria fades. In fact, large traders are already starting to sell 240-strike calls in October 2025 and March 2026, while we’re also seeing in-the-money call sales at the October 165 call. Stack that up with a buildup out-of-the-money January 2026 90-strike put buyers, and there’s options-related resistance looming in the latter half of 2025.

Within a week, CRCL’s market cap pulled back to $47.38 billion, with the shares on track for a fifth loss in six sessions. Overhead resistance has emerged at a trendline formed from the stock’s mid-June and late-July peaks, pressuring the equity lower and capping its most recent breakout attempt. Circle Internet stock is clinging to a 5% gain since its early June debut, but the aforementioned, pent-up resistance from stacked out of the money buying continue to act as a headwind.

President Donald Trump’s AI plan continues to present new challenges to tech companies looking to make a government sale. Requiring proof of no "woke" chatbots, alongside continued pressure to outpace China in the digital arms race, leaves cloud and big tech in a challenging spot to disclose internal policies. Sam Altman’s OpenAI suffered a knock after news it plans to soften its workload with Scale AI, but still plans to launch its GPT-5 model as early as the next few weeks. In other words, the rise of AI remains a balancing act for the risk and reward.

Bitcoin ETF Extends Pullback

Excerpt: The price of iShares Bitcoin ETF (IBIT) marked fresh all-time highs before pulling back in the last few weeks, consistently closing well below that peak despite a bounce off the 20-day moving average. Buyers showed up at that level but could end up trapped, like the all-time high buyers currently are. The massive out-of-the-money call buying is a major driver for a contrarian play.

The 60-, 62-, 65-, and 70-strike calls have an enormous amount of open interest (OI) that could unwind. There has been short capitulation over the past two weeks, with short interest cut in half at the all-time high break, forcing shorts to cover and more room for new shorts to enter. IBIT closed under its May 13 pivot high as well as its December 2024 highs. Under 60, the next biggest call wall is 55, and this may be a magnet for prices to fall to. Last year’s similar base failed to take out all-time highs and the 20-day trendline trapped buyers, which started the downtrend from liquidations.

IBIT has been stagnant, Friday testing the recently supportive $66 area. An attempted breakout on July 14 was thwarted by the $68 ceiling, sending the shares lower in six of the nine successive sessions. While ITBIT remains 24% higher in 2025, the ETF seems to be at the mercy of the onslaught of crypto news. But the upside from ‘Crypto Week’ has already worn off.

Bitcoin (BTC) has rewarded crypto longs, the currency tanking below the $116,000 mark amid a 24-hour flush of liquidation on Friday. Over half a billion long positions were cut across the market, pressuring BTC. While some suggest this is a "pure leverage flush," the tangible $600 million liquidation would suggest you hold tight to making any bullish runs on Bitcoin-adjacent giants.

Construction Name Missing Its Seasonal Summer Boost

Excerpt: Homebuilder PulteGroup (PHM), as a cyclical stock, faces risks from economic slowdowns or recession fears as the demand for homebuilders decreases. Ongoing economic disruptions and supply chain challenges could also negatively impact operations and profitability. On the charts, most major moving averages, including the 200-day, are now downward-sloping, confirming a bearish trend. The shares breaking down from a head-and-shoulders pattern only reinforces the downside potential.

PHM attempted a breakout after enjoying a second-quarter post-earnings pop but was quickly rejected by the $120 ceiling. This area also capped numerous breakout attempts for the majority of January, leaving little opportunity for sustainable growth in the near term. The shares are now clinging to a 5% year-to-date gain, with economic challenges looming.

An incoming Aug. 1 trade deadline is one of the more forefront concerns for investors, as homebuilding supplies look to be one of several sectors slated to take a direct hit. This past week also recharged tensions between Trump and Fed Chair Jerome Powell, after the president visited the Federal Reserve, though he subsequently said he has no plans to fire Powell. Next week eyes will be on the latest Fed rate decision, as well as a slew of construction spending and pending home sales reports.