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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...

Derek Moore discusses how everyone seemed to get the direction of rates across the yield curve wrong. How adding duration in hindsight was the wrong choice. Comparing market prognostications in 1995 to today. What the Fed Funds rate probabilities really measure. Plus, explaining why bonds make or lose money based it their duration (sensitivity to interest rates).   The bond market got rates wrong....

Derek Moore and Jay Pestrichelli return this week to discuss what current forward PE rations and whether that informs future market returns. Reasons PE ratios may go up or down including earnings increasing or markets going lower. Have there been a jump in forward earnings expectations? Then they check in on the high yield spread against treasuries and relationship to the VIX Index. Later they dis...

Derek Moore and Jay Pestrichelli are back at it discussing how higher interest rates have impacted the price of call and put options. They use some examples of what happens to options prices due to rates and dividends. Then they discuss the recent rise in long term treasury rates, the downgrade of US Treasury debt, and what if any effect the US Treasury issuing massive amounts of new treasury bond...

Derek Moore responds to a Bloomberg chart highlighting how cheap protective puts are right now according to Bank of America research. At least since 2008, and why it might be good to be hedged when it's cheap rather than waiting for a market crash to happen first. Then he explains some requirements for a stock to get included in the S&P 500 Index, when it regularly rebalances, and how relaxing the...

Jay Pestrichelli checks in with Derek Moore to discuss people that always predict horrible market crashes are coming and why it's so unhelpful for investors. Then they talk through what the market fears (besides the normal stuff) at this point including profit margins and looming strikes. Why is economic data so confusing and if its broken. Finally, they go through the S&P 500 having the 11 th bes...

Derek Moore is joined once again by ZEGA Financial CEO Jay Pestrichelli to debate whether inflation still matters to the market. Plus, even though stocks like META are up huge off the bottom, they still are down from their prior highs. Why this shows the power of losing less through proper hedging and how it can potentially increase returns during volatile times. Speaking of volatility, they discu...

Derek Moore points out that no, the Fed doesn't need to lower rates without some problem or a recession. Looking at the nineties when markets went up despite Fed Funds rate above 5%. Then looking at the net short positions of traders via the commitment of traders report. It shows recently at markets moved higher, short sellers covered causing a short squeeze? Finally, before a recommendation, some...

Derek Moore and ZEGA Financial CEO Jay Pestrichelli comment on Bloomberg's article showing the Nasdaq 100 Index just had its best 1 st half since the early nineties. Is the market overbought or rightly valued and trending? Do investors who missed the rally say it's overbought because they need it to go back down? Looking at how markets do when they are up big in the first half of the year. Plus, J...

Derek Moore and ZEGA Financial CEO Jay Pestrichelli talk about CNN's Fear and Greed Index and whether it's a good indicator for markets. Then they explore differences in Put Call Ratios and how they may not measure what people think. Plus, they look at the volatility surface across different option maturities noting how low near-term options implied volatilities have gotten indicating there is no...