The major US equity averages are coming off their strongest week since April.
Last week, the S&P 500 closing at a record high of 7757 and the VIX chasing down near 14.9.
While at the same time traders snapping up bullish call options this week's CPI, as well as a wave of high beta earnings will test whether this risk on rally has real legs and with options markets.
Pricing in a 0.6% swing on CPI as well as heavy speculative flows surging across retail favorites and AI.
We are looking at derivatives tapes offering clear clues on where risk is heading.
Well joining us this morning to break down the options flows as well as sentiment is JJ who is senior VP and head of retail expansion at C Global Markets.
JJ, good morning.
Thank you so much for joining us.
We continue to keep a close eye on what's happening across the board here.
The S&P 500 did hit record highs last week and we did see that CEO SKU fall to its lowest level since late 2024.
But given that we're counting down to the CPI print tomorrow morning, do you think Wall Street is potentially getting too complacent about what we're seeing when it comes to energy?
Well, I think what's happened, I mean, you see this a lot when there are upheavals in the market, is a daily story, then it becomes a weekly story, then maybe a biweekly story, and I feel like we're somewhere between a weekly and biweekly at the moment.
And the reason being there's really nothing that is new, so to speak.
Yes, there are moments, if you will, but right now it's all about the negotiations and you know I think we're all seeing a little bit of how the Sausages made in terms of negotiation.
So I think people are discounting a lot of the news unless something major happens.
So once there is something that is newsworthy, so to speak, I think you will see a movement one way or the other.
What the market, I believe, is really saying right now is that they believe that this can settle.
You know it is interesting though because we are seeing a bit of a dichotomy between crude oil prices.
Last couple of days and VIX the last couple of days.
VIX hanging at about that 15.5 level and for your viewers who aren't quite as familiar with what that would tell us, you know, if I were to use sort of the beak signals, I would have just about an all clear in terms of what the market is telling us when we get to 20, that's when you start to worry and put up those caution flags.
So right now things are in a pretty good.
Mode, you know, we've also seen, if you will, summer trading yesterday and Friday.
Lower volumes, not quite as much going on.
I believe that will pick up with some of the earnings tonight with CPI, as you mentioned, tomorrow, but overall this is, you know, as kids start to head back to school, etc.
I think a lot of people are out of office this week, if you will, and so that's led to a little bit of the summer trading doldrums.
Yes, I like that analogy there regarding the flags on the beach, especially since you and I are actually working and not on vacation, but I do want to zoom in on what we're seeing in terms of retail options flows around SpaceX.
So in terms of some of the aggressive call volumes, what do they tell you about retail risk appetite and traders chasing a rebound back to potential IPO levels?
We saw SpaceX touch the IPO levels yesterday, fell off a little bit this morning right before I came on the air here, but what I will say is there seems to be an appetite for SpaceX from retail that we are seeing aggressive call buying in terms of the stock going higher over the next couple of weeks.
People really do believe in the.
And you know whenever I look at an Elon Musk run company, it reminds me so much of Steve Jobs when he was at Apple.
It's people really betting on the CEO as much or even more so than betting on the product, if you will.
And so that's why I think so many people are attracted to this name.
And again, a lot of them are doing it in calls, not necessarily doing. the stock so that the risk is defined right up front, you know, many people may have learned after the IPO how quickly these names can move around overall.
And so I think you know we continue to see people buying these 145, 150 calls in hopes that the stock continues to move higher and above that original IPO price.
Yeah, and JJ, while I have you here, uh, applied materials and core, we've also report this week.
So are traders starting to hedge against potential capbacks and order backlog disappointments?
I think 100%, particularly you know if I look at what we're seeing in terms of core we, we're seeing some put buyers there, particularly on the 90 and 85 lines and in fact down to the 80 lines, so that's something to keep your eye on when people start doing that into earnings after stocks had a pretty Move overall.
The other name that's coming out that's really a retail favorite is super microcomputer, and there we're seeing the opposite.
We're seeing the 34 calls, the 36 calls, the stock trading under 32.
People definitely looking for that to the upside, but I think you hit it right on the head.
The thing that has been really the drag on anything in the tech sector.
Now is cap back spending and order backlogs and if you talk in a bad way about either one of those in your earnings call, it's going to be really difficult for that stock to go up no matter how good your earnings are right now.
What the earnings season has told me is that if you don't paint a bright picture going forward, your stock is going to pay the price even if you beat earnings up front.
Yeah, and JJ, before I let you go, we have about 60 seconds here, so tell us about Cisco.
Cisco Systems, you know, it's about a 6% move priced in.
Let's not forget Cisco in its last earnings moved 14% for Cisco.
You just don't see that.
This is an old line company which has reinvented itself to become very competitive in the AI space, etc.
But stocks like that, you rarely see that type of move.
So with Cisco.
Again, CapE will be something we want to see.
Progress they continue to make on AI will be of course what everybody is looking for in the call overall.
And again, this is one where I don't normally expect a ton of movement, not usually a ton of options traders, because it's a bit more of an old line established stock, but a very important stock in the market because of their worldwide reach.
Well, JJ, always appreciate your time.
Thank you so much for joining us ahead of those earnings reports.
Have a great day and thank you so much.
