Close-up Of Snow-Dusted Zugspitze Massif Peaks In The Wetterstein Mountains In Tyrol

A snow-dusted peak, leading to a valley of who the heck knows (Michael Nguyen/Getty Images)

Options markets signal “optimism peaks” for Magnificent 7 stocks

“The number of stocks in the S&P top 100 trading with inverted call skew (a sign of extremely bullish sentiment where the OTM call trades at a higher volatility than the ATM call) has surged to a high of ~20% (vs. historical average of just 3%),” per Cboe.

Luke Kawa

11/3/25 11:21AM

Of all the many ways to measure investor sentiment — surveys, futures positioning, and more — one of my favorites might be through the answer to this question: how much are traders willing to pay for options that offer upside in stocks compared to those that protect against downside?

Cboe’s head of derivatives market intelligence, Mandy Xu, noted that about three weeks ago, skew in the S&P 500 spiked amid renewed market jitters over a fraying of America’s trade relationship with China. Skew, in this case, tracks the ratio between the implied volatility of puts versus calls, a proxy for the relative demand for bearish versus bullish options. Now, that’s completely flipped on its head, for the index in general and for its largest components in particular.

She wrote (emphasis added):

“The decline in skew over the past few weeks has been notable: SPX 1M skew (25-delta ratio) has fallen from the 99th percentile high three weeks ago to a 6th percentile low early last week, before steepening at the end of last week following the Fed meeting to now the 48th percentile. Longer-dated skew screens even cheaper, with SPX 6M skew now in the 16th percentile low. The flattening in index skew is consistent with the pickup in bullish sentiment we’ve observed in single stock options. The number of stocks in the S&P top 100 trading with inverted call skew (a sign of extremely bullish sentiment where the OTM call trades at a higher volatility than the ATM call) has surged to a high of ~20% (vs. historical average of just 3%). While the metric is not yet at the extremes we saw in 2021 or late last year, it certainly signals a high level of investor optimism going into year-end.”

Zooming in on a similar measure, Goldman Sachs analyst Cullen Morgan shows that sentiment is particularly ebullient for the so-called Magnificent 7: the cohort of Nvidia, Apple, Microsoft, Amazon, Alphabet, Meta, and Tesla.

In an October 31 note, he wrote:

“Coming into earnings this week, put-call skew in the Mag7 complex inverted for the first time since December of last year (i.e. implied volatility of calls traded over puts). This phenomenon has only happened a handful of times. The move implies investors are overwhelmingly positioned for continued upside. Historically, such low skew readings have tended to coincide with short-term consolidation or reversals as optimism peaks.”

Goldman on put-call skew inversion — Source: GS Research, GS FICC & Equities, Bloomberg as of Oct 31

Toby Bochan

Market Wrap

Markets cheer surprise gift of cooler CPI amid renewed AI optimism to finish higher

The S&P 500, Nasdaq 100, and Russell 2000 surged on Thursday — perhaps we’ll have a Santa rally after all!

CAMARILLO, CA FEBRUARY 09: A cannabis farm worker de-leafs cann

Trump signs executive order expediting reclassification of marijuana as a less dangerous drug

Rescheduling would lift regulatory pressures that have been weighing on US cannabis operators’ margins. Shares of weed companies, many of which don’t sell cannabis in the US, tumbled an hour before the executive order was signed.

J. Edward Moreno6h

Max Knoblauch7h

Rivian climbs as it rolls out a “universal hands-free” update and scores an upgrade from Baird

Shares of EV maker Rivian are on pace for their 10th best day of 2025 on Thursday, following an upgrade from Baird to “buy” from “hold” and the rollout of its new hands-free driving update.

Baird raised its price target on Rivian nearly 79% to $25, writing that “2026 is the year of R2.”

Meanwhile, Rivian says its new hands-free feature will allow drivers to take their hands off the wheel across 3.5 million miles of US and Canadian roads.

Despite referring to it as “universal hands-free” driving, the EV maker says the feature will not stop or slow for traffic lights or stop signs, follow navigation systems, or make turns, and will function only on roads with visible lane lines.

Rivian revealed the update at its AI Day last week, when it also hinted at a robotaxi plan.

Rivian rolls out new 'Universal Hands-Free' driving feature | TechCrunch

Meanwhile, Rivian says its new hands-free feature will allow drivers to take their hands off the wheel across 3.5 million miles of US and Canadian roads.

Rivian revealed the update at its AI Day last week, when it also hinted at a robotaxi plan.

Matt Phillips8h

The stock market loves your rising electricity bill

Utilities with a footprint in the massive PJM Interconnection, the country’s largest power grid, were up Thursday after prices set in a key auction hit a record high of $333.44 per megawatt-day.

Such power providers, including Talen Energy, Constellation Energy, and Vistra, saw tidy gains shortly before midday.

“This auction leaves no doubt that data centers’ demand for electricity continues to far outstrip new supply, and the solution will require concerted action involving PJM, its stakeholders, state and federal partners, and the data center industry itself,” Stu Bresler, set to become PJM’s chief operating officer next month, told Reuters.

As I’ve previously mused, political pushback from high power prices, partially created by the AI boom, could become a constraint on development of such sites. Democrats in the US Senate are now calling for hearings on the issue.

It’s fertile political soil. This morning’s US CPI report for November showed electricity prices up nearly 7% year over year, the highest since the tail end of the postpandemic inflation in April 2023.

Costs on Key US Grid Hit New Record, Testing Affordability

Luke Kawa9h

Micron’s earnings, soft inflation, and OpenAI valuation chatter revive speculative AI trade

The three biggest news events since markets closed yesterday are all helping spur a big bounce-back for the more speculative companies tied to AI:

Micron’s eye-popping Q2 guidance reaffirmed beyond a shadow of a doubt how hot AI demand continues to run in the near term.
While the data is undoubtedly messy, core CPI inflation decelerated by much more than anticipated in November. Lower rates are a clear positive for more marginal companies levered to the AI theme, whose stocks trade with a higher embedded risk of default and whose bonds have also been suggesting more credit risk as of late.
OpenAI reportedly getting its hands on more money (and commanding a higher valuation in the process) provides some semblance of valuation support for these firms and also a better fundamental foundation as well: more cash in CEO Sam Altman’s pockets means more cash he has to make good on commitments to OpenAI’s many suppliers.

Put together, the key news items since Wednesday’s close are producing massive gains for the likes of Bloom Energy, Cipher Mining, POET Technologies, CoreWeave, IREN, and Nebius.