Markets
markets
Luke Kawa
5/5/25

Traders doubt the rally. But they don’t fear another crash.

Investors don’t think the V-shaped recovery in financial markets is poised to become a full-blown check mark.

But neither do they fear a brisk return to a market in the kind of free fall markets endured in the sessions following the announcement of reciprocal tariffs on April 2.

That’s the message from the options market, whose cautious tone has contrasted sharply with the blaring risk-on signals sent from the stock market.

Cboe Head of Derivatives Market Intelligence Mandy Xu said, “We’re not seeing any upside chasing” in S&P 500 options. She flagged that the ratio between the implied volatility of 25-delta out-of-the-money S&P 500 call options versus at-the-money options (or call skew) has dipped, indicating meager demand for derivatives to capitalize on another leg back toward all-time highs over the next month.

While there’s no greed to speak of, there’s a calculated, measured fear: investors aren’t buying crash insurance — as seen by the relatively low demand for very far out-of-the-money put options compared to ones that are closer to the index’s current price — but a comparable measure of put skew is well above call skew.

It’s the first noteworthy divergence between put skew and crash insurance seen to date in 2025. As we recently wrote, traders have good reason to return to focus on run-of-the-mill risks rather than extremely large tail risks, given the Trump administration’s willingness to moderate trade policy in response to perceived financial distress.

Relatively low call skew and rising put skew can have a fairly benign/positive interpretation: you don’t need to chase upside in the options market if you’ve already reengaged by buying stocks. And if you’ve bought stocks, you have a need to hedge downside risk again.

Per Deutsche Bank strategists led by Parag Thatte, equity positioning is moving higher and closer to neutral among discretionary investors, while systematic investors are still very light relative to history.

Put it all together and it’s a pretty nuanced picture of a US stock market that has been anything but nuanced lately, on a nine-session winning streak that seems poised to snap on Monday.

More Markets

See all Markets
markets

Rocket lab soars to new record close amid rally for retail faves

Rocket Lab ripped by roughly 10% Friday to close at a new all-time high, riding an upturn of retail enthusiasm for a coterie of tech-themed favorites, even as the broader market was more or less flat on the day.

Goldman Sachs’ basket of “retail favorites” — its heaviest weights are Reddit, AppLovin, and Tempus AI — was the second-biggest gainer among the company’s flagship US equity baskets on Friday, rising about 1.6%. The S&P was almost dead flat.

It’s not Rocket Lab’s first retail rodeo, as the money-losing company has more than doubled this year and is up nearly 700% over the last 12 months.

Oracle Wall Street Revisions

Analysts revise up anything and everything they thought about Oracle

After the company’s bombshell earnings this week, Wall Street thinks Oracle’s trajectory has changed.

markets

Six Flags pops after reiterating its guidance as theme park attendance rebounds

Six Flags shares rose more than 7% today after the company reported a rebound in attendance and early season pass sales heading into the fall. The nine-week period ended August 31 saw 17.8 million guests, up about 2% from the same stretch last year, with stronger momentum in the final four weeks. 

More importantly, Six Flags reaffirmed its full-year adjusted EBITDA guidance of $860 million to $910 million, showing confidence that its cost and operations strategy can stay strong for the duration of the year. Riding that wave, Six Flags also said early 2026 season pass unit sales are pacing ahead of last year, and average season pass prices are up about 3%.

The good vibes come despite a drop in in-park per-capita spending, especially from admissions, where promotions and changes to attendance mix (which parks or days guests visit) have weighed. Earlier this week, the amusement giant signed a new agreement that extended its position as the exclusive amusement park partner for Peanuts™ in North America through 2030.

Despite the rally, Six Flags shares are down about 52% year to date.

markets

Rivian turns red on the year, squeezed by a recall and the looming end of the EV tax credit

Shares of EV maker Rivian are down more than 5% on Friday following the company’s recall of 24,214 vehicles due to a software issue. The stock move erases Rivian’s year-to-date gain and turns the company negative on the year.

Rivian’s 2025 model year R1S and R1T are affected by the defect, which was identified after a vehicle’s hands-free highway assist software failed to identify another vehicle on the road, causing a low-speed collision. Rivian said it’s released an over-the-air update to fix the issue.

The recall marks Rivian’s fifth this year, affecting nearly 70,000 of its vehicles.

Rivian’s shares are down more than 20% from their 2025 high, which came prior to the passage of President Trump’sbig, beautiful bill.” Through the legislation, the $7,500 EV tax credit is set to expire at the end of the month.

Latest Stories

Sherwood Media, LLC produces fresh and unique perspectives on topical financial news and is a fully owned subsidiary of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate, including Robinhood Markets, Inc., Robinhood Financial LLC, Robinhood Securities, LLC, Robinhood Crypto, LLC, or Robinhood Money, LLC.