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Business Wire
3 days ago
- Business
- Business Wire
Schwab Trading Activity Index™: Cautious Optimism in July as STAX Score Edges Upward
WESTLAKE, Texas--(BUSINESS WIRE)--The Schwab Trading Activity Index™ (STAX) increased to 41.79 in July, up from its score of 40.66 in June. The only index of its kind, the STAX is a proprietary, behavior-based index that analyzes retail investor stock positions and trading activity from Schwab's millions of client accounts to illuminate what investors were actually doing and how they were positioned in the markets each month. The reading for the four-week period ending July 25, 2025, ranks 'low' compared to historic averages. 'What the July STAX shows us is that while Schwab's retail clients are bullish, that optimism is measured,' said Joe Mazzola, Head Trading and Derivatives Strategist at Charles Schwab. 'The S&P 500 may have hit new all-time highs in July, but when we consider the ways Schwab's retail clients are engaging with the markets, we're not seeing the kinds of risk-on strategies that would indicate a lot of confidence in the rally's longevity.' Stock market volatility fell to five-month lows in July, easing as geopolitical worries receded and the U.S. budget debate got settled relatively easily. Tariff concerns remain in the market, but a deal with Japan in late July with 15% tariffs on its products appeared to calm worries. The Cboe Volatility Index® (VIX) fell beneath 15 by late July, well below its historic 20 average. Economic data generally held up decently during the STAX period, with June seeing 147,000 U.S. jobs created and unemployment dropping to 4.1%, both improvements from May. Retail sales in June grew a healthy 0.6% from May, and preliminary July University of Michigan Consumer Sentiment rose to 61.8, its highest level in five months. Inflation reports in July brought new concerns that tariffs might be factoring into price growth, though monthly gains weren't extraordinary. The June Consumer Price Index (CPI) saw headline CPI up 0.2% and core – which excludes food and energy – up 0.3% from May. And on an annual basis, the CPI rose 2.7%, up from 2.4% in May. Even as services prices saw slower increases, prices of goods ticked higher, to some a sign that tariffs were beginning to take their toll. Prices for toys, clothing, and furnishings rose. Second quarter earnings season got off to a mostly solid start in July, with around 83% of companies exceeding Wall Street analysts' expectations. The estimate for blended second quarter profit growth, which includes companies reporting and projections of companies yet to report, rose while actual earnings from companies reporting the first few weeks of earnings season climbed more than 8%. The rally in July broadened through the month, with nearly 75% of S&P 500 stocks trading above their respective 50-day moving averages by the end of the STAX period. Volatility continued to depress, pushing the VIX to the low 15's, as the S&P 500 failed to record a 1% move for the fourth consecutive week. Stocks briefly dove and yields for the 10-year Treasury note climbed to nearly 4.5%, the high end of their recent range, on media reports that President Trump had asked congressional Republicans if he should fire U.S. Federal Reserve Chairman Jerome Powell. After reassurance that the termination would not take place, stocks resumed their rally and yields eased. Aside from that spike, the Treasury market generally marched in place during July despite worries that the Republican budget plan could significantly raise U.S. debt (yields trade inversely to Treasuries). Yields again fell below 4.3% for the benchmark 10-year note in early July, but mostly stayed between 4.3% and 4.5%, not far from the Fed's target range. Popular names bought by Schwab clients during the period included: NVIDIA Corp. (NVDA) Tesla Inc. (TSLA) Palantir Technologies Inc. (PLTR) Inc. (AMZN) UnitedHealth Group Inc. (UNH) Names net sold by Schwab clients during the period included: Apple Inc. (AAPL) Ford Motor Co. (F) Advanced Micro Devices Inc. (AMD) Boeing Co. (BA) Nike Inc. (NKE) About the STAX The STAX value is calculated based on a complex proprietary formula. Each month, Schwab pulls a sample from its client base of millions of funded accounts, which includes accounts that completed a trade in the past month. The holdings and positions of this statistically significant sample are evaluated to calculate individual scores, and the median of those scores represents the monthly STAX. For more information on the Schwab Trading Activity Index, please visit Additionally, Schwab clients can chart the STAX using the symbol $STAX in either the thinkorswim ® or thinkorswim Mobile platforms. Investing involves risk, including loss of principal. Past performance is no guarantee of future results. Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type. Historical data should not be used alone when making investment decisions. Please consult other sources of information and consider your individual financial position and goals before making an independent investment decision. The STAX is not a tradable index. The STAX should not be used as an indicator or predictor of future client trading volume or financial performance for Schwab. About Charles Schwab At Charles Schwab, we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients' goals with passion and integrity. More information is available at Follow us on X, Facebook, YouTube, and LinkedIn. 0825-TAZA
Yahoo
6 days ago
- Business
- Yahoo
Wall Street Suggests Hedge for End of Stocks Calm During August
(Bloomberg) -- Bank of America Corp. strategists are suggesting a way to protect against any sudden bouts of turbulence in August, a historically choppy time for a stock market that's been unusually calm in recent weeks. The World's Data Center Capital Has Residents Surrounded An Abandoned Art-Deco Landmark in Buffalo Awaits Revival Budapest's Most Historic Site Gets a Controversial Rebuild We Should All Be Biking Along the Beach San Francisco in Talks With Vanderbilt for Downtown Campus With volatility near a six-month low and the S&P 500 Index sitting at a record high, the days and weeks ahead present a potentially perilous combination of seasonal factors for US equities. Volumes thin out during the summer months as traders go on vacation, and perhaps because of this, the biggest stock market swings tend to occur in August. What makes matters worse, it's also typically one of the two worst months of the year for performance. 'August tends to rear its head in terms of illiquidity,' said Nitin Saksena, BofA's head of Americas equity derivatives research, recalling volatility shocks in the month three times since 2011. To hedge against that risk, Saksena recommends putting on what's known as a W trade. It involves selling instruments that make money if the market keeps chugging along placidly, and then using that income to pay for larger bets that equities will suddenly surge or slump. Currently, the second leg is relatively cheap because few in the market are expecting abrupt swings to occur. So far, Wall Street is bullish on stocks in the long run, with the economy and earnings looking solid. However, there's also reason to worry, with valuations stretched and uncertainty about trade negotiations still high. Meanwhile, the Cboe Volatility Index, or VIX, isn't far from its lowest levels since February. Of course, there are other ways to hedge against the risk of shocks in the market. Matthew Thompson, co-portfolio manager at Little Harbor Advisors, runs two exchange-traded funds that try to beat the S&P 500 and Nasdaq 100 Index by trading derivatives through market volatility. He buys downside protection when certain stress indicators start flashing, then sells those hedges for a profit during peaks in volatility. In early August of last year that strategy paid off for Thompson when an abrupt reversal of the yen carry trade lifted the VIX to the highest levels since the outbreak of the pandemic. But traders should be aware of the tendency of markets to mean-revert — meaning that while such market shocks may be inevitable, they also tend to be short-lived. 'Our whole philosophy is, let's look out for those rare circumstances when defense is likely to be profitable and helpful, versus just a wet blanket over your whole portfolio all the time because you're nervous,' Thompson said. Russia Builds a New Web Around Kremlin's Handpicked Super App Burning Man Is Burning Through Cash Everyone Loves to Hate Wind Power. Scotland Found a Way to Make It Pay Off Cage-Free Eggs Are Booming in the US, Despite Cost and Trump's Efforts It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Economic Times
28-07-2025
- Business
- Economic Times
Traders hedging stocks at record highs dabble in exotic options
New York: Investors looking to protect against a pullback with stocks at peaks are venturing beyond plain-vanilla options. ADVERTISEMENT The steady grind higher in the S&P 500 Index has pushed most gauges of implied and realized volatility to the lowest levels in months-in some cases years. The collapse in volatility after the April tariff shock has surprised many investors, given the geopolitical tensions and uncertainty around the impact of levies on corporate earnings. With a whiff of complacency in the market and a resurgence of meme-stock mania signaling euphoria among investors, strategists across Wall Street are talking more about picking up some protection against a retreat from the highs. Hedging is likely to gain traction both in the context of upcoming earnings and tariff deadlines, and the seasonal trend for the Cboe Volatility Index to rise through the third quarter from July lows. But simple strategies can be tricky in a rising market, where the few, small dips are seen as buying opportunities. Vanilla put options quickly fall out of the money as the index rises, forcing investors to keep shifting positions higher to maintain their desired level of downside strategists are pitching over-the-counter alternatives. At UBS Group and JPMorgan Chase, they have recently recommended so-called lookback or re-settable put options, where the strike follows the market higher and - in the case of lookback puts - is set at the highest closing print during the life of the trade. Those are currently trading at a historically narrow premium to vanilla puts, JPMorgan strategists including Bram Kaplan wrote in a note earlier this month."Hedging is very much in focus," said Antoine Porcheret, head of institutional structuring for the UK, Europe, Middle East and Africa at Citigroup Inc. "We have seen decent buying flows in the lookback put as it is cheap by historical standards since the value of the lookback feature is a function of implied volatility, which is low." ADVERTISEMENT UBS strategist Kieran Diamond wrote in note last week that historically, a market on the highs is more likely to go higher than reverse, thus increasing the chance of a vanilla put struck today becoming deeper out of the money. A lookback put implemented from a market high would have shifted the strike of a two-month put at 95% of the spot level 3.4% higher on average over the past 10 years, and the lookback feature costs only 0.4% more than the vanilla put, he said. ADVERTISEMENT The best scenario to buy a lookback put is when the market rallies and then collapses. In such cases, the additional payoff versus the vanilla version can be significant."There was a wave of interest in the lookback hedge payoff earlier in the year, when spot was near highs and vols had dropped towards lows," said Pete Clarke, UBS's global head of volatility strategy. "Following the latest rally and vol reset, we've seen them actively quoted once again." ADVERTISEMENT Markets get another test in the coming week with the Federal Reserve rate decision, US employment and gross domestic product data, and the tariff deadline - plus a slew of big tech earnings. Meanwhile, the re-emergence this month of wild swings in meme stocks will also likely have institutional investors reaching for protection trades, rather than chasing further gains. In 2021, retail-frenzied gains marked a spurt of euphoria for stocks, with moves that quickly faded. ADVERTISEMENT (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
28-07-2025
- Business
- Time of India
Traders hedging stocks at record highs dabble in exotic options
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel New York: Investors looking to protect against a pullback with stocks at peaks are venturing beyond plain-vanilla steady grind higher in the S&P 500 Index has pushed most gauges of implied and realized volatility to the lowest levels in months-in some cases years. The collapse in volatility after the April tariff shock has surprised many investors, given the geopolitical tensions and uncertainty around the impact of levies on corporate a whiff of complacency in the market and a resurgence of meme-stock mania signaling euphoria among investors, strategists across Wall Street are talking more about picking up some protection against a retreat from the highs. Hedging is likely to gain traction both in the context of upcoming earnings and tariff deadlines, and the seasonal trend for the Cboe Volatility Index to rise through the third quarter from July simple strategies can be tricky in a rising market, where the few, small dips are seen as buying opportunities. Vanilla put options quickly fall out of the money as the index rises, forcing investors to keep shifting positions higher to maintain their desired level of downside protection So strategists are pitching over-the-counter alternatives. At UBS Group and JPMorgan Chase, they have recently recommended so-called lookback or re-settable put options, where the strike follows the market higher and - in the case of lookback puts - is set at the highest closing print during the life of the trade. Those are currently trading at a historically narrow premium to vanilla puts, JPMorgan strategists including Bram Kaplan wrote in a note earlier this month."Hedging is very much in focus," said Antoine Porcheret, head of institutional structuring for the UK, Europe, Middle East and Africa at Citigroup Inc. "We have seen decent buying flows in the lookback put as it is cheap by historical standards since the value of the lookback feature is a function of implied volatility, which is low."UBS strategist Kieran Diamond wrote in note last week that historically, a market on the highs is more likely to go higher than reverse, thus increasing the chance of a vanilla put struck today becoming deeper out of the money.A lookback put implemented from a market high would have shifted the strike of a two-month put at 95% of the spot level 3.4% higher on average over the past 10 years, and the lookback feature costs only 0.4% more than the vanilla put, he best scenario to buy a lookback put is when the market rallies and then collapses. In such cases, the additional payoff versus the vanilla version can be significant."There was a wave of interest in the lookback hedge payoff earlier in the year, when spot was near highs and vols had dropped towards lows," said Pete Clarke, UBS's global head of volatility strategy. "Following the latest rally and vol reset, we've seen them actively quoted once again."Markets get another test in the coming week with the Federal Reserve rate decision, US employment and gross domestic product data, and the tariff deadline - plus a slew of big tech the re-emergence this month of wild swings in meme stocks will also likely have institutional investors reaching for protection trades, rather than chasing further gains. In 2021, retail-frenzied gains marked a spurt of euphoria for stocks, with moves that quickly faded.
Mint
27-07-2025
- Business
- Mint
Wall St Week Ahead-Tariffs, Fed, tech results headline jam-packed markets week
(Repeats SCHEDULED COLUMN originally published on July 25, no changes) Aug 1 deadline looms for US trading partners Fed policy decision Weds, US jobs report Fri Results due from Apple, Microsoft, Amazon, Meta NEW YORK, July 25 (Reuters) - A looming U.S. deadline for more severe global tariffs is among a barrage of upcoming events threatening to disrupt an increasingly calm U.S. stock market that has set a string of all-time highs. President Donald Trump has extended a deadline to August 1 for when higher levies will take effect on an array of trading partners unless deals are struck. That could boost market volatility heading into next Friday. Much more is on the calendar that could move markets. Investors will watch the Federal Reserve's monetary policy meeting, the monthly U.S. employment report and earnings reports from megacap companies Apple, Microsoft and Amazon. "There is going to be a lot to digest for markets into next week," said Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments. "Expectations from the markets have gone up relative to several months ago," Miskin said. "So it's just going to be another big week for trying to meet loftier expectations." RECORD HIGHS, FALLING VOLATILITY The benchmark S&P 500 kept tallying new all-time highs during the week. Equities have recovered from a plunge after Trump's April 2 "Liberation Day" tariff announcement set off fears of a recession that have since ebbed. The S&P 500 has surged 28% since its low for the year a week later, while the tech-heavy Nasdaq Composite has jumped 38% in that time. "We just got three years of return in three and a half months," said Chris Galipeau, senior market strategist at the Franklin Templeton Institute. "The equity market needs to consolidate this move." Market volatility measures have eased considerably. The Cboe Volatility Index spiked to 60 in April, but has been below its long-term median of 17.6 for most of July and on Wednesday posted its lowest close in five months. However, pockets of volatility have emerged in the past week. Eye-popping gains in highly shorted stocks such as Kohl's and Opendoor Technologies heralded the possible return of a "meme stock" craze that could signal some over-exuberance in risk appetite, at least among retail investors. Meanwhile, the record-setting rally has lifted valuations to historically expensive levels. The S&P 500 was trading at 22.6 times earnings estimates, well above its long-term average P/E ratio of 15.8, according to LSEG Datastream, which could make the market vulnerable to disappointments in the coming week. Higher tariffs on the European Union and many other countries could take effect on August 1. Trump had paused many of the most severe of his reciprocal tariffs in April, following the bout of extreme market volatility. "There is a particular belief and conviction that the market has that the administration just won't be as aggressive as they've been threatening because of what was experienced in early April," said Kevin Gordon, senior investment strategist at Charles Schwab. "The next hurdle in the trade (situation) is really to see what sticks." FED OFFICIALS AWAIT TARIFF IMPACT The Fed is widely expected to hold interest rates steady in its monetary policy decision on Wednesday, as central bank officials want more data to determine if tariffs are worsening inflation before they ease rates further. But tensions between the White House and the central bank over monetary policy have heightened, with Trump repeatedly denouncing Fed Chair Jerome Powell for not cutting rates. Two of the Fed Board's Trump appointees have articulated reasons for supporting a rate cut this month. A packed week of corporate results includes Apple, Microsoft, Amazon and Facebook parent Meta Platforms, four of the "Magnificent Seven," whose stocks heavily influence benchmark indexes because of the companies' massive market values. With about 30% of S&P 500 companies having reported results, overall second-quarter earnings are on track for a 7.7% increase from a year ago, according to LSEG IBES. That would beat a 5.8% estimated rise on July 1. The week ends with the monthly U.S. employment report on Friday. Employment in July is expected to have increased by 102,000 jobs, according to Reuters data as of Thursday, after rising by 147,000 jobs in June. "We've had relatively strong economic data that almost shows a modest re-acceleration in the economy in June and I think markets are priced to reflect this re-acceleration," Miskin said.
