A recent survey of options positioning for the most actively traded stocks in the S&P 500 indicates that the 'Magnificent Seven'—including Meta, Microsoft, Amazon, Tesla, and Advanced Micro Devices—may be pivotal for the index's future performance. The analysis, conducted by Nations Indexes, utilized the 'RiskDex' metric to assess the demand for out-of-the-money call options compared to puts.
Meta and Microsoft emerged as the top stocks with significant call skew, with Meta's RiskDex score at 0.75 and Microsoft's at 0.79, both indicating a strong bullish sentiment.
Scott Nations, president of Nations Indexes, cautioned that such bullish positioning could be a contrary indicator, suggesting that investors might be overly optimistic and setting themselves up for potential disappointment, similar to Nvidia's recent performance.
If these stocks deliver strong earnings, it could lead to a shift in market leadership, as Meta and Microsoft have not reached record highs in nearly a year, and Amazon has underperformed relative to the Nasdaq 100 year-to-date. Amazon's RiskDex score was 0.98, indicating a slight bullish lean, while Tesla and AMD also showed strong bullish sentiment with scores around 0.9