Equity Indexes
Markets This Week: Cautious Optimism, With Caveats
Stocks edged higher this week after the administration signaled that the war with Iran may be winding down. We'd temper that enthusiasm — the other parties to the conflict haven't gotten that memo yet, and crude oil is proving it, swinging wildly with every headline.
Still, the major indexes are in the green for the week.
Equity Volatility Is Cooling — But Don't Get Comfortable
The fear gauges are retreating. VolDex has dropped back below 20.00 and RiskDex is hovering around 11.00. Both remain elevated by any historical standard, but the sharp pullback from Friday's levels is a meaningful shift in tone.
The one metric moving in the other direction is CallDex — and that's actually telling. Traders are waking up to the fact that out-of-the-money calls are unusually cheap right now, making them an attractive way to position for further upside without taking on excessive risk. The same dynamic is playing out in the Nasdaq-100.
Treasury Bonds
Treasuries Are Sending a Confusing Signal
This is where it gets interesting. Bond volatility metrics are broadly higher — which isn't the surprising part. What is surprising is that out-of-the-money call prices remain weak. In a genuine flight-to-quality environment, those contracts should be in demand. The fact that they aren't is worth watching closely and we believe this is an opportunity to buy some lightly to take advantage of this weakness.
You can learn more about RiskDex at Learn More About RiskDex.
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