Credit Suisse's Xu Says 'Skew Is Askew Right Now'

The video tutorial discusses the concept of skew in financial markets, highlighting unusual trends such as increased volatility during market rallies and the flattening of skew in indices like the Russell. It contrasts retail and institutional investor behaviors, noting that retail demand is driving call options, while institutions are selling calls. The tutorial also examines the impact of options on stock movements, particularly during earnings seasons, and concludes with an overview of the derivatives market, emphasizing that it is not overwhelming the broader market.

What unusual market condition is highlighted in the first section regarding volatility?

• Volatility remains constant during market rallies.

• Volatility is unaffected by market rallies.

• Volatility increases during market rallies.

• Volatility decreases during market rallies.

What is primarily driving the flattening of skew at the single stock level?

• Institutional investors buying calls

• Institutional investors selling puts

• Retail investors buying calls

• Retail investors selling puts

How do institutional investors typically respond to the demand for upside calls?

• By holding their positions

• By selling calls to overwrite positions

• By buying more calls

• By buying puts

What has been a significant driver of single stock moves recently?

• Global economic policies

• Earnings reports

• Political events

• Changes in interest rates

What is the current state of correlation within the S&P sectors?

• At a one year low

• At a one year high

• Unchanged

• Fluctuating unpredictably