Explaining Telsa Implied Volatility | Bitcoin Selloff Post Spot ETF | What History Tells Us About Election Year Returns
Release Date: 01/28/2024
Market Correction | Mortgage Rates Higher | No Thanks 24-Hour Trading | Synthetic Options
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Derek Moore and Mike Puck from ZEGA Financial discuss Friday’s selloff. It’s official, we are in a 5% market correction. Looking back at other corrections greater than 5% from the highs. Mortgage rates move back up while 10-year treasury yields surge. Commodities are higher on the year but still down from all-time highs. Gold makes another all time high. Later they look at the value vs growth performance including the magnificent 7 stocks compared to the rest of the market. Finally, stocks and bonds are more correlated than people realize in higher inflation regimes. Futures selloff...
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Market Selloff | No Rate Cuts? | Bitcoin vs Gold | CPI Inflation Sticky | VIX Curve
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss Friday’s selloff. So, was it all the readjustment of Fed rate cut expectations? Is CPI Inflation putting the Fed in a box? Michael Saylor says Bitcoin is better than Gold. The rally in Gold that everyone is sleeping on. CPI Supercore trending higher showing services not goods are the culprit. Later they examine the VIX Futures curve as the front months rise. Finally, they talk about the continued bear market due to higher rates on 10-to-30-year US Treasuries from the March 2020 all-time highs against the stock market and high...
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Buying At All-time Highs Better? | S&P 500 Returns After Last Hike | Developed International Beats the S&P | How To Tell Whether Options Are Expensive
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, are back to explore surprising data about buying the market at all-time highs vs any other day. Plus, how do markets and bonds perform post the last fed hike? Later, while you were sleeping developed international markets outperform U.S. markets. And listener question “who do I know what a good price for an option is?” What is a high or low price for an option? Components that make up and drive option prices Market performance post last fed rate hike Bond market performance after last fed rate hike MSCI EAFE developed markets...
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Most Record Highs Since 2013 | The Fed No Rush to Cut? | VVIX and VIX Super Quiet | Value vs Growth | Cocoa More Valuable than Gold?
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss Fed governor Waller (not Christopher Walkin) hinting the Fed should be in no rush to cut interest rates. Plus, we haven’t seen this many record stock market highs since Q1 of 2013. So, what does that mean if anything? Examining VVIX and VIX which both are really quiet and low right now. Growth has outperformed value by quite a bit, but do some relative value charts hint value may have its time in the sun? Later, corporate profit margins continue to be strong despite many saying they must revert to the mean. Finally, no Cocoa is...
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The Fed Gets Bullish? | Markets Don’t Go Down Just Because They Go Up | Yield Curve Inversion Record | Bitcoin Halving
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss the Fed getting bullish by reducing unemployment estimates, raising GDP growth estimates, and doing nothing else but the market liked it. All while the yield curve inversion sets a record for longest in history. What is Bitcoin halving and what does it do for supply and demand? Looking at the stock market after going up a lot, why historically it can continue going (or not) up. Looking at 1995-1999 post Fed cut bullish moves. Why media explanations of 2 or 3 interest rate cuts by the Fed based on the median interest rate aren’t...
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Michael Saylor is Right on Bitcoin? |Worst Crash Since 1929 Coming? | Semiconductors Get Big Flows | 0 DTE Option Stats
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, talk through some examples of options trading in 0 DTE options on the SPX and Nvidia. Plus, a hedge fund manager says the worst crash since 1929 is coming. Looking at huge inflows into the semiconductor ETFs. Derek actually agrees with Michael Saylor’s points on Bitcoin including whether it’s a currency or property. Media mentions of stock market bubble are rising but so are continued mentions of AI. Finally, PPI producer price index comes in hot especially services while real retail sales still hasn’t gone above its 2022 highs....
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Worst Market Timing Ever? | Options Cost of Carry | Option Put Call Parity | Unemployment Bad News Is Bad News?
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss how the magnificent 7 stocks aren’t all going up this year. Plus, reviewing what the worst time to buy stocks was and how investors would have done even if they had. Later, they explain why the last 10-15 years before retirement need growth but hedging. How Japan’s central bank might take interest rates from negative to positive, shipping container rates, inflation, Nvidia probabilities and the 15th anniversary of CNBC’s “Mark Haines Bottom” 3/10/2009. What is the cost of carry for options What is put call parity...
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Why VIX Is Hard to Trade | SuperCore PCE High Again?| High Yield Bond Spreads | The Fed Is Not Cutting? | Semiconductors Surging (Again)
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, explain why it’s so hard to trade the VIX via options or VIX futures given the nature of the products and how VIX works. Supercore PCE, yeah that’s a thing now, came in hot so what does that mean for the Fed and rates? Speaking of the Fed cutting rates, what if they don’t cut this year? Later they explore how High Yield Bonds aren’t showing any fear and comparing the High Yield spread, the long term annualized total return of the High Yield Bond Index, and how CCC Junk Bonds once were yielding a few years ago what short...
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Nvidia To the Moon | Implied Volatility and Earnings | Earnings and Markets Have Low Correlations? | Nvidia Cheap?
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss Nvidia’s beat on earnings, their march towards $2trillion market cap, and how as earnings forecasts rise, even though the stock has made new highs, forward PE ratios go lower. Then, they explore what the options market via implied volatility was forecasting for an Nvidia move post earnings. Later, they review a comparison between the S&P 500 Index annual return vs the EPS growth to see if there is any relationship. Hint, it’s not too correlated even when they compare the current year market performance against the 1 year...
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Put & Call Implied Volatility Mismatch? | US Dollar vs S&P 500 Correlation | Sticky Inflation | Japan Recession | Explaining Why Stocks Go Up (or down)
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Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, follow up on last week’s PE ration (useless?) discussion explaining how stocks go up or down based on earnings, multiples, and other factors. Then they delve into correlations between the US Dollar Index and the S&P 500 Index. Later, the surprising fact that as Japan’s Nikkei Index makes 35-year all-time highs they are in a technical recession. Finally, more evidence shows that inflation may be stickier and some that it may not. As always, they’ll have some recommendations! Explaining how EPS earnings per share works How...
info_outlineDerek Moore and Jay Pestrichelli, CEO of ZEGA Financial, are it at once again where they analyze Tesla’s implied volatility right before earnings vs what happened. Did the option’s market misprice premiums? Also, in the episode they talk about Bitcoin’s drop as a sell the news buy the rumor example while Derek argues that Bitcoin’s volatility make it unusable as a currency to transact business. Later they dive into some data showing that when markets are up 20% the year before the election, election years historically have never been down and does that mean anything for 2024? Finally, they talk about China’s selloff relative to US markets and how everyone thought emerging markets would be the thing in 2023.
Bitcoin in a bear market drawing down greater than 20% from pre-ETF launch high
Bitcoin at least in the short term seems like people bought the rumor but are selling the news
Can Bitcoin be a currency if it drops 20% within a month?
What is an option’s implied volatility mean vs an option’s historical volatility
Looking at the price of the at the money straddle on Tesla right before earnings
How to figure out what the options market is pricing in for a 1 standard deviation move
Post Tesla earnings did the markets accurately price in how much Tesla moved after earnings?
2023 was up > 20% so what does that mean for election year based on some data?
Election year and the markets
China’s stock market gets a little rocky but no bearing on US markets?
Emerging markets were picked at the beginning of 2023 to close the gap on US markets
Emerging markets still underperforming the S&P 500 Index
Explaining how companies earnings in S&P 500 Index are aggregated together not weighted
Comparing Apple’s earnings in a quarter to Starbucks and why the big 7 matter most right now
Semiconductors weighting in the S&P 500 Index hits a high
Semiconductors as the picks and shovels, bluejeans play for AI?
Mentioned in this Episode:
What Option Volatility Means for Markets | Is the Market Too Dovish on Interest Rate Expectations? | Does the Fed Need an Economics Lesson?
Hedging With Options Examples | Soft Landing? | US Congress Trading Returns | Is Good News or Bad News Good?
Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3jQYgMt
Derek’s new book on public speaking Effortless Public Speaking https://amzn.to/3hL1Mag
Derek Moore’s book Broken Pie Chart https://amzn.to/3S8ADNT
Contact Derek [email protected]