Well. Wall Street is bracing for critical inflation data this week following a blowout August jobs print and September fed rate hike. Odds stand at nearly 60% ahead of next week's meeting. Meanwhile, cash volatility remains subdued. But in New York morning trade we are looking at the VIX trading higher up by nearly 7% this morning.
Meanwhile, option traders are making big bets on major tech earnings reports out from Oracle as well as Adobe later this week. Well joining us live to break down option's positioning as well as market sentiment is JJ Kinahan senior VP at CBOE Global Markets. JJ good morning. I hope you had a great holiday weekend.
So all of us are awaiting those inflation prints at the end of this week. So tell us how derivatives markets are pricing the risk as we head into the end of this week.
Yeah. As you said in your opening there, you know we are seeing the VIX a bit higher up 7% this morning. And with that what we're also seeing is the future. So out in time. We're starting to see that go a little bit. In fact, if we look at about a month and a half, we see that the future for late October is almost close to 19 now.
So again, 20 tends to be the warning sign, if you will. Why people would think is that, you know, yes, we have a lot going on. But this conflict in Iran has been going on for a few months now. The threat of higher rates has been there for a few months now, but September and September cyclically tends to be a tough month.
If you look at the last 15 years where we have been in pretty much a bull market, September has actually been down 53% of the time. So that's kind of an odd anomaly. But the real anomaly comes from, if you look at every the 40 worst down months we've ever had since the crash in 1929, nine of them, or almost 25%, have been September.
So I think there's just a heightened awareness when this month starts that people start to say, maybe it's time to buy a little bit of protection for the downside and be not quite as bullish as we see in some other months.
Yeah. In JJ while I have you here earnings are still trickling out and Oracle options are pricing in about a 11% post earnings move on Thursday. So what is that aggressive upside call buying telling you about trader sentiment ahead of this week's release.
Yeah as you said it's about an 11% move, which actually is right in line with what we've seen for the last eight quarters overall. And yes, as you said, I mean, you know, this is for Friday's expiration. We are seeing people buying the upside calls. What it does tell me is that people have an anticipation that although there is a lot of on the AI front right now, it's all about ROI.
What are you actually returning and all the money that you're spending on AI? And I think a lot of people believe that Oracle is going to come up with some very positive answers right now, because if you don't believe that, I don't know why else you would be playing this. To the upside. Quite honestly, that really is the key to everything.
It's such a well-run company. They've completely turned themselves around and they continue to show. You know, over the last couple of earnings seasons that they have done very well. And again, earnings drive markets. And one of the things about Oracle is they continue to drive things higher.
And JJ we're also waiting Adobe results out later this week. Options are pricing in about a 5% move around. Its print and call volume did spurt to double its ten day average last week, even during a market selloff. So tell us what's happening when it comes to options traders right now and what you expect to see this week?
Well, I think again, as you said, Adobe is one. It's not a huge options trader. But overall the fact that in a down market it traded so much upside calls makes me think that people continue to be bullish there. I think the real message is being sent by the trading that we're seeing in these technology stocks is that, you know, buying dips or buying into earnings over the last couple of years has worked out pretty well for people.
We're seeing a lot of retail participate, particularly in Oracle, and I think that it makes some sense from the fact that, again, you tend to go to the same strategy until something stops it. We haven't really seen anything stop it over the last five years. So I think that's why people continue to dip into the well.
And the thing about options is, at least they are defining their risk by buying those calls up front. You know exactly what you can lose if things go poorly against you. And it's why you often see people look at the options market so much more in the earnings than they do at stock activity itself. Because again, this is where people who are going to speculate on the earnings or who are going to hedge themselves against their stock position in the earnings are coming in.
And the fact is, on both of these two major names, we're seeing a lot more call play than put play. So a lot more upside than downside speculation.
Well JJ we will have to leave it there for today. Thank you so much for joining us. I appreciate your time as well as all of your insights.
