MARKET WRAP

A nice start to the week for equities with good looking breadth numbers (despite some Fateful 8 declines). There was a bit of selling into the close that may have been 0DTE related. For the day, SPX +0.7%, QQQ +0.6%, and IWM +1.2%. It was a fairly quiet day in other asset classes. The US10Y yield stayed near 4.3%, Oil was slightly higher, now $67.50 and Gold continues to new all time highs. The VIX has collapsed over the past few trading days and closed today 20.50. VIX March futures expire tomorrow (more on that below).

• On today’s RiskReversal Pod, discussions on the Treasury Secretary’s comments over the weekend and a look ahead at Nvidia’s conference.

• On MRKT Call a look at where SPX could go from here as well as check-ins on a ton of individual tickers. Enjoy!

MRKT MATRIX: March 17, 2025

Today’s Top Stories:

• Dow jumps 350 points, S&P 500 rises for second day as stocks try to rebound from rout (CNBC)

• A second major bank has cut its S&P 500 forecast on worries about economic growth (CNBC)

• Slumping Stocks Threaten a Pillar of the Economy: Spending by the Wealthy (WSJ)

• Trump’s Trade Wars Tip World to Slower Growth, OECD Warns (Bloomberg)

• The Days of Set-and-Forget Investing Just Ended for Many Americans (WSJ)

• Trump’s New World Order Tests the Dollar (WSJ)

• The Fed Is in Wait-and-See Mode. Investors Want Reassurance It Will Act If Needed (Bloomberg)

• Trade War With Europe Puts $9.5 Trillion at Risk, US Firms Say (WSJ)

• Nvidia’s Next Act Needs to Be Even Bigger (WSJ)

• South Korea’s Chip Exports to China Sink as US Controls Tighten (Bloomberg)

• Startup Behind Stargate Data Center Strikes Unprecedented Energy Deal (The Information)

Today’s RiskReversal Podcast is Presented by CME Group and SoFi

Will Markets Rebound from Recent Lows?

Dan Nathan and Guy Adami discuss a variety of topics including insights from the Treasury Secretary on 'Meet the Press', the upcoming Federal Reserve meeting, Nvidia's GTC conference with CEO Jensen Huang, and recent China economic data. Dan and Guy analyze last week's market performance, focusing on the VIX and S&P 500 movements, and debate whether the recent market bounce is temporary or a sign of a longer-term trend. They also discuss the potential impacts of Nvidia's keynote on tech stocks, China's stimulus efforts, and the market performance of semiconductor companies like Intel and AMD. Additionally, they touch on comments from notable market strategists and Fed expectations. Towards the end, they preview key earnings reports from FedEx, Micron, and Nike, and discuss their implications for the economy and various sectors.

Timecodes 

• 0:00 - Bounce Back

• 3:45 - Nvidia

• 6:00 - China

• 9:15 - Market Sentiment

• 17:00 - Fed Preview

• 19:50 - Earnings (FDX, MU, NKE)

By clicking “Subscribe, I accept the MoneyLion Privacy Policy.

What’s Next?

Today's follow-through rally gained momentum throughout the afternoon, drifting higher and ultimately stalling near 5700 on the SPX—a key level, as it aligns with last Monday’s gap lower. This could be a pivotal spot for the bears to make a stand, with the next two days likely offering their best opportunity until next week (details below).

In Sunday’s note, we briefly mentioned the potential impact of expiring options on the market this week. To recap, the current options setup—especially on quiet, green days like today—tends to support a gradual drift higher. From yesterday:

How This Works:

A significant portion of outstanding option positions will expire this Friday. Last week’s steep sell-off caused implied volatility (IV) to spike, leading to two key developments:

1. Existing out-of-the-money puts moved closer to the money.

2. New puts were purchased during the decline.

This rapidly increased the delta hedging demand for those who sold these puts (market makers and institutions), requiring them to sell on the way down to remain delta neutral. 

However, as the market bounces (as it has) and implied volatility drops (as it has), the value of these puts they’ve hedged against declines rapidly. This means on the way up they find themselves over-hedged, forcing them to buy back equities as prices drift higher to maintain their delta-neutrality.

What Happens Next?

• If the market were to decline sharply after today’s rally none of this dynamic matters, as we’d be right back into wild swings with IV spiking.

• However, if the market continues to rise into Friday’s close, and implied volatility continues to decrease, options market makers will continue to add to the upside momentum as long as they still need to cover short deltas.

• This effect could end before expiry if the market rises high enough for market makers to become long gamma, that level is closer to 5800 on the S&P 500.

One More Options Factor to Watch this Week

If volatility returns this week, it could be amplified by tomorrow morning’s large VIX expiration, which leads directly into Wednesday’s FOMC meeting.

The next two days will be a key test for this rally, as VIX expirations occasionally trigger short-term volatility when front-month futures roll off (shifting to April futures tomorrow). For bears looking to regain control, Tuesday and Wednesday present the best opportunity. Into Friday, options expiration could create somewhat random countertrend behavior that doesn’t necessarily align with broader market trends.

Next week, with the impact of options fading, market conditions may allow for a clearer directional move.

Subscribe to the RiskReversal YouTube Channel and drop a comment/like to show your support

Want to check out past podcast episodes? Go to wherever you get your podcasts and type in “RiskReversal Media”

We want to hear your feedback! Reply to this email with any comments or questions