Over the past three months, the nominal options trading volume for individual stocks in the US stock market has plummeted, dragged down by the sharp decrease in trading volume of NVIDIA, the AI "darling." John Marshall, an options expert at Goldman Sachs, believes this indicates a reduction in the risk appetite of retail and hedge fund investors who are willing to take risks.
However, this current state of trading doldrums may not last long. October typically sees a seasonal increase in volatility in the US stock market, so there is potential for a resurgence in volatility.
Marshall points out that from 1996 to 2023, the average nominal daily trading volume of stocks and options has peaked in October. Since October is the earnings season, public companies often manage their performance to the end of each calendar year and provide guidance for the following year's performance. Therefore, the coming weeks will be a crucial period for trading activity.
In addition to corporate earnings, there are more than 300 key non-profit catalysts across various industries. Marshall mentions some key events, such as the US CPI, Tesla's self-driving taxi Robotaxi launch event, AMD's AI Day event, and many other analyst day events held by various companies.
Advertisement
Currently, the options trading of the "Seven Sisters" of US tech giants, including Microsoft, Apple, NVIDIA, Google's parent company Alphabet, Amazon, Facebook's parent company Meta, and Tesla, accounts for about 60% of all S&P 500 options trading volume. In recent weeks, the trading volume of all these giants, except NVIDIA, has been increasing.
Among them, Tesla stands out, with its options accounting for 17% of the S&P options trading volume, surpassing NVIDIA, whose options trading volume accounts for 14%.
Wall Street institutions have recently been optimistic about Tesla's third-quarter performance. Based on global electric vehicle sales data for July and automotive registration/production data for Europe and China in August, Barclays analyst Dan Levy estimates that Tesla's deliveries in the third quarter will be about 470,000 vehicles, significantly higher than the market's general expectation of 461,000 vehicles.
Moreover, Levy points out that the growth in Tesla's automotive sales in the third quarter was almost entirely driven by the Chinese market. He believes that good delivery data will help maintain a positive market sentiment until Tesla's self-driving taxi Robotaxi is released on October 10th, which can at least prevent potential progress in stock prices from being affected by recent fundamental issues.
There is also an analysis that the release of Robotaxi will be a key turning point for Tesla, as Tesla is shifting from traditional automotive manufacturing to focusing on self-driving technology, partly supported by its Dojo AI supercomputer.
Analysts believe that the details revealed at the Robotaxi launch event are crucial. Key areas that investors will focus on include the timeline for the commercial operation of Robotaxi (including technical readiness and considerations for operations/ regulatory/logistics), as well as the business outlook (including how Tesla's cost structure compares with competitors).Investors have long been anticipating the launch of a new low-cost Tesla model, which may be on the agenda at the Robotaxi unveiling event in October.