This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Derivatives on Smartkarma.
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1. BYD (1211 HK) Tactical Outlook: Buy-The-Dip Scenarios With Passive Buying from HSI/HSCEI Trackers
- A recent insight by Brian Freitas signals that BYD (1211 HK)buying from global index trackers is done (more passive buying from HSI/HSCEI trackers may come later this month).
- As of Tuesday, the stock is currently in the middle of a modest pullback, 1 week down, reached a support area where the probability of a bounce is around 50%.
- We are at the start of the month, it may be early to benefit from the passive buying discussed by Brian Freitas, however this pullback could support a buy-the-dips strategy.
2. Global Stocks Outlook: Where Is the Bottom for This Crash?
- Analysis of the NIFTY, Nikkei 225, Hang Seng, KOSPI 200, S&P/ASX 200, S&P 500 and Nasdaq-100 stock indices: where is the bottom for the global stock market rout?
- As explained in this insight, our models have been battle-tested since 2008. While they can’t predict the future, they provide valuable insights for identifying market bottoms during crashes.
- What follows is a focused analysis of each market index we track, aimed at identifying potential bottoms amid extreme sell-offs, helping position ahead of the next Bear Market rally/reversal.
3. Tencent (700 HK): Volatility Plays and Skew Top Trades
- Over the past five trading days, Tencent (700 HK) multi-leg option strategies showcased a variety of approaches. Strategy highlights and volatility context are provided.
- With short-term implied volatility below its median, long volatility strategies dominate, with a balanced mix of bullish and bearish positions.
- Open interest spread across monthly and quarterly expiries, with some notable strategies taking advantage of longer expiration dates, and a steep negatively sloped skew $475.
4. SP500: Friday Sell-Offs, the VIX, and a Bit of 1987
- Drops greater than 5% on a Friday are rare, we examine historical returns after such events.
- We revisit 1987 price action and reconstructed VIX levels to add historical context.
- With circuit breakers now in place and political volatility elevated, we assess what today’s sell-off might mean for the next trading day.
5. Global Markets: Why This Sell-Off Is Different and What It Signals
- The SP500 and DXY both dropped yesterday—historically an unusual development.
- We examine the SP500-DXY relationship alongside long-term shifts in capital flow and what this could mean for global markets vs SP500.
- A distinct performance trend that began in 2009 may now be in the process of reversing.
6. NSE NIFTY50/ Vol Update / SEBI Intervenes Stalling Expiry Day Shift. IVs Pushed to 1Yr Lows.
- SEBI intervenes on constantly changing Option contract specifications. NSE halts expiry day shift indefinitely & awaits clarity from regulator.
- IVs slid lower to 11% levels – extended weekend being a primary factor. Risk premia is nearing historically low extremes. “Low & Down” state persists for the Vol-Regime model.
- Tactical Implications: (1) Scale back Vol harvesting structures as “Low & Down” Vol-state persists. (2) Reverse Calendars for long gamma exposure to upcoming events. Utilize Low IVs & curve Contango.
7. TESLA’S Outlook After Rumors Elon Musk Will Step Back from DOGE
- Politico just published a report saying that Elon Musk is about to Step Back from DOGE, if true, this could impact somehow Tesla (TSLA US) stock price.
- Death threats and the spate vandalism directed at Tesla (TSLA US)‘s cars, plus Musk being viewed as a potential political liability by members of the Trump Administration are the drivers.
- Tesla (TSLA US) brand has been heavily damaged by Musk involvement in politics, sales are falling gobally and competitors like BYD (1211 HK) are rising. The stock is short-term OVERBOUGHT.
8. Nikkei 225 (NKY INDEX) Drops Amid US Tariffs: Implied Volatility Hits Extreme Levels
- Market Reaction: The announcement of US reciprocal tariffs led to significantly lower market open throughout Asia-Pacific. In the US, S&P 500 futures dropped -3.5%, with the VIX spiking to 23.45.
- Impact on Japan: Japan faces a 24% tariff, with specific sectors like automobiles hit with 25%. This led to a 4.5% drop in the Nikkei 225, stabilizing at 34,600 (-3.2%).
- Volatility Increase: The Nikkei 225 VIX index jumped from previous levels in the low 20’s to rise above 38 before retreating to 32.8, indicating the 99th percentile of implied volatility.
9. Nifty Index Options Weekly (Mar 24 – 28): Sticky Implied Vol and a Tactical Hedge Ahead of Tariffs
- Weekly recap of volatility and price metrics, covering option volumes, volatility trends, the spot/implied relationship, and open interest.
- Implied vol remained stable, and we discuss why it may be sticky at current levels.
- With global weakness and the upcoming April 2 reciprocal tariffs announcement, we reiterate a tactical hedge.
10. April Global Macro Volatility: Strong Price and Vol Seasonals
- Monthly deep-dive into price and vol metrics across Global indexes and macro assets.
- In-Depth look at the current state of the markets as well as how volatility and price may unfold.
- We highlight strong seasonal trends in April, with all markets typically rising and realized vol typically coming in below implied.
