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0 DTE Options to Blame for Selloff? | 2024 Targets for S&P 500 Index | Fed Dot Plots Always Wrong?

Buy & Hedge Interest Rates S&P 500/SPX VIX Volatility

By Derek Moore

Show Summary:

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, discuss how people are blaming the Wed 1.5% selloff on 0 DTE options while the CBOE says not so fast as dealers may have been buying stocks during the drawdown thus stabilizing markets. Later they talk shipping container rates spiking higher due to issues in the Suez Canal and Red Sea. Is this a fly in the ointment for inflation? Then they talk about how analysts making 2024 S&P 500 Index price and earnings estimates must get the forward 2025 earnings estimate right and what multiple the market will be trading at. What about oil in 2024? Analysts seem to be bearish, but Jay and Derek look at potential for refilling the SPR (strategic petroleum reserve). Finally, they talk VIX and VVIX and note how compressed the daily changes have been and what if anything that means going forward. 

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Topics Include:

  • 0 DTE Options (or ZERO Days to Expiration Options) are blamed for midweek selloff.
  • Why did the CBOE say 0 DTE options are not to blame and instead dealers were buying stocks. 
  • How market makers were a stabilizing force during the selloff rather than adding to selloff
  • Are they getting wrong the impact of 0 DTE options?
  • Why calls for Volmageddon 2.0 might be missing what caused Volmageddon 1.0
  • S&P 500 Index targets for 2024 vary quite a bit.
  • Why is it so hard to nail next year’s S&P 500 Index targets because you really need 2025 EPS. 
  • How analysts could have the same earnings targets but different multiple expectations
  • Shipping container rates spiked due to the issues in the Red Sea leading to the Suez Canal
  • Below the surface inflation pressure and remembering how container rates foretold inflation
  • SPR Strategic Petroleum Reserve levels and whether refilling them will be inflationary.
  • Gasoline prices have softened while analysts are bearish on oil for 2024.
  • Contrarian view might be to look at oil to recover which would move CPI.
  • The Fed Dot Plots never wind up being correct.
  • Is Diehard a Christmas movie or not?

Mentioned in this Episode:

Zero-Day Options Shouldn’t Be Blamed for Selloff, Cboe Says 

Jay Pestrichelli’s book Buy and Hedge 

 Derek’s new book on public speaking Effortless Public Speaking 

 Derek Moore’s book Broken Pie Chart