NYT stock analysis: options traders react to AI lawsuit filings

Key takeaways

• Newly unsealed statements from Microsoft and OpenAI executives threaten the fair-use defense in the New York Times Company’s copyright suit, according to CNBC.
• NYT shares have been flat year to date and barely moved on the day, but options activity picked up.
• One large trade bought roughly 4,400 October 72.5/77.5 call spreads, CNBC reports.
• The Department of Justice filed a statement of interest on September 1 backing a fair-use reading for AI training.

The news

This NYT stock analysis starts with a court filing, not a price move. CNBC reports that newly unsealed statements in the Times’ case against Microsoft and OpenAI weaken the companies’ fair-use defense, which depends on showing that the accused product neither substitutes for nor competes with the original work.

Citing reports from The Wall Street Journal, The Washington Post and the Financial Times, CNBC relays several allegations from the unsealed material. An OpenAI executive allegedly described chatbots as an “existential threat” to journalism because they deliver information without a click-through. A Microsoft director of applied science, Brent Hecht, reportedly called the training “the largest theft of labor in human history.” OpenAI co-founder Greg Brockman allegedly wrote in 2017 that he was “deeply motivated by the gazillions” he hoped to earn, and reportedly replied “ah nice” on learning an employee had found a way around the Times paywall. These are allegations drawn from court documents as reported by those outlets.

The CNBC Pro contributor who wrote the piece argues the material raises the odds of either a large settlement and licensing deal or a Times win at trial. One counterweight came on September 1, when the Justice Department filed a statement of interest asking the court to hold that training AI models on copyrighted work is fair use, citing national security.

The stock and the options flow

Despite the stakes, the shares have not reacted much. They have been flat for the year and barely moved on Friday. The options market was more active.

Detail of the trade	Reported figure
Contracts	About 4,400 October 72.5/77.5 call spreads
Net cost	$0.925 per spread
Risk as share of Friday’s close	About 1.3%
Potential gain by October expiration, as share of Friday’s close	At least 4.6%

A call spread combines a purchased call at a lower strike with a sold call at a higher strike. It costs less than the call alone but caps the payoff at the higher strike. CNBC notes that volume in October 62.5 and 65 puts around the same time suggests the buyer may have sold downside puts to lower the cost further, with those strikes sitting just below the August lows.

An October expiration, the article says, implies an expectation that a summary judgment ruling or a settlement could come within weeks. The piece adds that the unsealed emails made that more likely.

What the case means for media stocks

The suit is a test of how copyright law treats AI training, and the companies tied to it sit at opposite ends of the question. For publishers, the issue is whether licensing becomes the cost of AI development. For AI developers, a loss on fair use would affect the economics of existing models. The DOJ’s filing shows the federal government weighing in on the developers’ side of the national security argument.

The article was written by a CNBC Pro contributor, and its disclosure states that Tidal owns or holds all the securities mentioned. The views are the contributor’s and the piece carries CNBC’s standard disclaimer that it is not investment advice.

What to watch

Whether the court rules on summary judgment or the parties settle, how the defendants respond to the unsealed statements, and whether NYT shares start to reflect any of it. This article reports published information and is not investment advice.