In mid October Chris Cole of Artemis tweeted;
“”Fundamentals are dead…flows are the only thing that matters today”.
We have written extensively on the call mania, especially the huge retail flow that has been hitting the markets like a tsunami. Our latest note explaining the “dynamics” can be read here.
Retail has wasted tons of premium buying expensive calls, recall when NASDAQ up was accompanied with volatility up.
Lot has changed since then. Most hot tech names that were the busiest options names during the melt up reported poor earnings and stocks have fallen substantially (Apple, AMZN etc).
Implied vols are down post earnings, but note that the trend of rising vols in some of these hot tech names is still up over past months.
Stuff like AMZN is approaching rather big support levels, so for the ones that were waiting for better entries, set ups of overwriting fresh longs still look interesting given the fact vols remain rather elevated, even after earnings.