Equity Indexes
Equity indexes are higher across the board so far this week with a rebound in AI names and strong economic data helping.
The expanded AI chip partnership announced between META and NVDA is lifting those companies and nearly all names in the AI space which could use a little help.
Decent economic data is helping as well with building permits and housing starts along with durable goods orders coming in at or better than expected. Traders also believe there are better than even odds of a rate cut at the Fed's June meeting.
S&P 500 volatility is generally lower for the week in sympathy with the rally in the equity indexes. However, S&P 500 30-Day CallDex is slightly higher as bullish traders buy out-of-the-money calls. Those calls are still historically cheap so expect continued buying if the equity rally continues.
Nasdaq-100 volatility is also lower but it is interesting that 30-Day CallDex is down. It would appear that today's gains in AI aren't convincing some traders.
Volatility for Treasury Bonds is mixed with 30-Day VolDex and CallDex lower with every other metric higher. Traders are clearly bracing for a downdraft in Treasury Bond prices.
Equities
The equities we cover are decidedly mixed this week. PLTR is leading the way higher but AMZN, AAPL, NVDA, and AVGO are all up more than 3% for the week.
The AI-focused names that have been under pressure are seeing VolDex ease as these stocks rally.
For example, every volatility metric is lower in AAPL.
Trade Illustration
With S&P 500 RiskDex still above 6.00, put spread risk reversals can be interesting. We'll watch for RiskDex to retreat to a more normal level (i.e., below 4.00) but traders can take advantage of low call prices and/or high put prices until then.
You can learn more about RiskDex at Learn More About RiskDex.
We'll continue to comment on X. You can follow us here: @Nations_Indexes.
