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Explaining Telsa Implied Volatility | Bitcoin Selloff Post Spot ETF | What History Tells Us About Election Year Returns

By Derek Moore

Show Summary:

Derek Moore and Jay Pestrichelli, CEO of ZEGA Financial, are it at once again where they analyze Tesla’s implied volatility right before earnings vs what happened. Did the option’s market misprice premiums? Also, in the episode they talk about Bitcoin’s drop as a sell the news buy the rumor example while Derek argues that Bitcoin’s volatility make it unusable as a currency to transact business. Later they dive into some data showing that when markets are up 20% the year before the election, election years historically have never been down and does that mean anything for 2024? Finally, they talk about China’s selloff relative to US markets and how everyone thought emerging markets would be the thing in 2023.

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Topics Include:

  • Bitcoin in a bear market drawing down greater than 20% from pre-ETF launch high
  • Bitcoin at least in the short term seems like people bought the rumor but are selling the news
  • Can Bitcoin be a currency if it drops 20% within a month?
  • What is an option’s implied volatility mean vs an option’s historical volatility
  • Looking at the price of the at the money straddle on Tesla right before earnings
  • How to figure out what the options market is pricing in for a 1 standard deviation move
  • Post Tesla earnings did the markets accurately price in how much Tesla moved after earnings?
  • 2023 was up > 20% so what does that mean for election year based on some data?
  • Election year and the markets
  • China’s stock market gets a little rocky but no bearing on US markets?
  • Emerging markets were picked at the beginning of 2023 to close the gap on US markets
  • Emerging markets still underperforming the S&P 500 Index
  • Explaining how companies earnings in S&P 500 Index are aggregated together not weighted
  • Comparing Apple’s earnings in a quarter to Starbucks and why the big 7 matter most right now
  • Semiconductors weighting in the S&P 500 Index hits a high
  • Semiconductors as the picks and shovels, blue jeans play for AI?

Mentioned in this Episode:

Jay Pestrichelli’s book Buy and Hedge 

Derek’s new book on public speaking Effortless Public Speaking 

Derek Moore’s book Broken Pie Chart 

Contact Derek derek.moore@zegafinancial.com 

Did you miss last week’s episode where Jay and Derek covered:

What Option Volatility Means for Markets | Is the Market Too Dovish on Interest Rate Expectations? | Does the Fed Need an Economics Lesson?

Listen Here: