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Derek Moore  and Jay Pestrichelli, CEO of ZEGA Financial, ask whether forward PE ratios are predictive of future market direction? Then they review how the S&P 500 Index has performed during each presidential election going back to 1996. Does it matter which party (Republicans or Democrats) are in office for markets? Is Tesla going to get kicked out of the Magnificent 7? Later Jay and Derek are jo...

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss the Fed and Powell press conference market reaction. Plus, they look at META and Apple option's implied volatilities did or didn't predict the post earnings moves. 1994-95 experience in Fed rates and bond yields compared to today. Later, they set the record straight on what NAV erosion is, why the Shiller PE may not be predictive of...

Derek 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. L...

Derek Moore  and Jay Pestrichelli, CEO of ZEGA Financial, are back to discuss whether the Fed grasps how prices historically always rise. That prices never drop and inflation dropping doesn't mean prices go down. Then they discuss the forward earnings estimates showing growth for the S&P 500 Index while comparing price to sales compared to January of 2022. Later, they discuss what the option volat...

Derek Moore  and Mike Puck of ZEGA Financial join up to discuss the run up and selloff in bitcoin around the bitcoin spot etf launches. Is it the obvious buy the rumor sell the news situation? How CPI components like lodging away from home and travel pricing are starting to cool. Later, examining the value vs growth debate and whether this is the year for value to finally have its day. Plus, forwa...

Derek Moore  and Jay Pestrichelli, CEO of ZEGA Financial, are back this week to discuss some hedging examples and how hedging is cheap right now. They even go through a few examples. Then they get into the sharp rise in container shipping costs before discussing the weaker PMI Services data. Later they note Bloomberg's data showing articles mentioning "soft landing" are the highest since the 2000-...

Derek Moore  and Jay Pestrichelli, CEO of ZEGA Financial, go through their 2024 predictions and review how right or wrong they were in 2023. Why predictions are so hard to make and why they are overrated. When markets go up over 10% in the final 2 months of the year historically what does that mean for returns the following year? How earnings growth and market returns are non-correlations. Accordi...

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss how people are blaming the Wed 1.5% selloff on 0 DTE options while the CBOE says not so fast as dealers may have been buying stocks during the drawdown thus stabilizing markets. Later they talk shipping container rates spiking higher due to issues in the Suez Canal and Red Sea. Is this a fly in the ointment for inflation? Then they t...

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss the new consensus of the Fed doing multiple rate cuts so what could go wrong? Record call option volume while the VVIX makes a move higher while the VIX continues lower. Viral article said 44% of home sales were to big institutions like Blackrock and Innovation homes but it was less than 0.4%. Later they look at whether the Powell Fe...

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, join up once again to discuss the drop in the VIX Index off the highs. How S&P 500 2024 targets are showing up and why investors may not care. Labor force participation turned down so what does that mean if anything? Finally, Simplifying what synthetic long stock strategies are and synthetic long stock with covered calls. What are the featur...

Derek Moore  and Jay Pestrichelli join up to discuss an unchanged VIX and VVIX index. Was our trading platform screen broken? Whether the VIX and VVIX Index is a coiled spring as they are both in compression mode of late. Then, they explore new data that shows the cost to buy a home vs rent is really high meaning its very costly to buy vs rent right now. Did the Fed cause this? Jay and Derek also...

Derek Moore is back with Jay Pestrichelli this week where they analyze the recent viral video where Dave Ramsey suggests people can safely withdraw 8% forever in retirement. What doesn't make sense, what is left out, and why the assumptions may be faulty. Then, they discuss the market seasonality and whether this November pop higher already delivered a year end rally? Later Jay and Derek discuss t...

Derek Moore is back with Jay Pestrichelli, CEO of ZEGA Financial, to review the Goldman Sachs probability of recession and Fed rate forecast for 2024. Then they do a deeper dive on key aspects of US Treasury Bond auctions. Hint, it's a Dutch auction and how to read the results of treasury auctions including the bid to cover ratio. Later they talk through changes in the makeup of the S&P 500 Index...

Derek Moore does a deep dive asking the question why is everyone rooting for the Fed to lower rates? If the Fed must lower interest rates, doesn't that mean there is trouble? Should investors instead be rooting for stable but higher rates where the long end un-inverts as a proxy for higher growth? What happens to market performance between the last Fed hike and first rate cut? What is the historic...

Derek Moore and ZEGA Financial CEO Jay Pestrichelli ponder whether the Fed is truly done and if the street is too optimistic on rate cuts in 2024. Plus, they discuss new data showing option selling ETFs are having record assets between inflows and new entrants. Bad news is good news still as employment ticks up. They delve deeper into the numbers including labor participation rate, size of workfor...

Derek Moore and ZEGA Financial CEO Jay Pestrichelli to discuss how despite the correction territory (markets down 10% from top), the VIX index hasn't shown any real fear. So, what will it take to see capitulation in the markets? Thus far high yield spreads haven't reflected too much worry. Then Derek is tired of pundits talking about equal weighted market vs the "Magnificent 7" comparison as this...

Derek Moore is back with ZEGA Financial CEO Jay Pestrichelli to discuss whether Jay Powell or bond traders are in charge of interest rate policy? How option volatility changes around earnings announcements. Why the spread between the 30-year Mortgage Rate and 10-year treasuries is historically wide including MBS (Mortgage-Backed Securities) impact. Plus, how MBS are doing something kind of weird r...

Derek Moore explains what it would take interest rate wise for bonds and TLT to get back to breakeven on price. A lot of misunderstanding is out there on buying bonds at the bottom and what that means.  How bonds have different drivers than stocks. Plus, inflation is ticking back up and what that means for the Fed. Finally, a deep dive into TLT components and the math behind what those buying TLT...

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, observe the destruction in long term treasury bonds due to the reflation of the yield curve. How does the market do with higher rates? What does a flattening yield curve mean for the economy? Bond and Stock correlations mean bonds not protecting portfolios? The Hussman 12-year forward return gauge. Strategic petroleum reserve (SPR) now only...

Derek Moore  and Jay Pestrichelli, CEO of ZEGA Financial, look at how markets have done during past Government Shutdowns. The S&P 500 Index during, and 3 and 6 months later. Then they get in dept on why selling in-the-money puts is the same as selling covered calls on stock. What are cash covered puts? How US Treasuries yielding 5% plus may tip the scales. The risks and payoffs of one versus the o...

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discussed the fallout in the markets during Jerome Powell's press conference post Fed decision. Then, they talk about high yield spreads and current interest rates across relative fixed income like investment grade, high yield, and treasuries. Finally, they explore how options are priced and which options are considered expensive or cheap vs...

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, talk through the recent CBOE analysis on impact of 0DTE options. Contrary to popular belief, 0DTE options may not be causing imbalances according to the data. Plus, explaining how cash settled (European) style options differ from American style where you can be assigned (or auto exercised). How short puts can mirror covered calls. Not surpri...

Derek Moore is back with ZEGA CEO Jay Pestrichelli where they discuss whether higher real yields are an issue for markets and how this period seems similar to the 1990's. Then they dive into implied volatility using companies like Tesla TSLA and Nvidia NVDA as examples to explore how options markets express views on expected moves based on options prices. What are the drivers of volatility moving...

Derek Moore is joined once again by Jay Pestrichelli, CEO of ZEGA Financial where deep dive into the latest employment numbers. Plus, they ponder whether once everyone flips a recession finally comes? Later, they noticed some technical analysis on crude oil prices and a stealth rally. Then Jay and Derek talk through the idea of synthetic option positions including synthetic long stock and its attr...

Derek Moore is joined by Jay Pestrichelli, CEO of ZEGA Financial, to discuss the Bank of America piece saying maybe Goldman Sachs got 0 DTE option effects wrong. Plus, what did Jay Powell's speech mean if anything? New Fed Funds futures probabilities point to the Fed raising yet again. Then, they go through some odds and ends like how participation in employment surveys is dropping, the high Atlan...