U.S. stock market risk sentiment index heats up, "animal spirit" makes a comeback!

A risk-seeking rebound led by US semiconductor and small-cap stocks is evolving into a frenzy of "animal spirits" sweeping through the entire US stock market. Bitcoin is once again challenging the $80,000 mark, with explosive growth in options trading volume for cryptocurrency stocks. More notably, a rare deviation between the Cboe Global Markets Inc volatility index (VIX) and surging oil prices is occurring - the market is pushing aside the political risks of GEO Group Inc. Boiling options market: Betting frenzy from Strategy to Coinbase "Bitcoin bull leader" Michael Saylor's Strategy (MSTR.US) became the absolute focus of the options market on Wednesday. The stock price rose 9% to $179 that day, and buying interest for call options on the options chain accelerated sharply, with a stunning ratio of 5:1 between the trading volume of call options and put options in early trading. The most popular contract was the call option with a strike price of $180 expiring on April 24. Analysts point out that these near-the-money contracts with only two trading days left imply a 50% probability of profit at expiration for holders. For stocks like Strategy known for their high volatility, this mild betting approach reflects not caution, but rather a high degree of confidence by traders in the short-term momentum of the stock. Cryptocurrency broker Coinbase (COIN.US) seemed to be just warming up with a 5% rise on Wednesday. A widely watched options trade showed an investor spending about $120,000 to buy 1,000 call option contracts with a strike price of $230 expiring this Friday. A simple calculation shows that Coinbase's stock price needs to rise by at least 10% over the next three trading days from its current level for this doomsday call option to fall within the money. Such short-term, high-strike aggressive bets indicate that market risk appetite is in an extremely frenzied state. In stark contrast to the speculative frenzy pervading related markets, Tesla, Inc. (TSLA.US) is facing a sober scrutiny after its earnings report. Despite the Nasdaq 100 repeatedly hitting new highs, Tesla, Inc.'s stock price has fallen by about 10% year-to-date. After the company announced its earnings, the stock fell 0.3% in after-hours trading on Wednesday. The options market currently prices in an expected volatility of about 5.5% for Tesla, Inc. on earnings day. However, historical data paints a more restrained picture: in the past four earnings quarters, three quarters had actual stock price volatility lower than market expectations. In fact, in the last two earnings quarters, Tesla, Inc.'s actual stock price volatility was less than 3%. This ongoing gap between expectations and reality has led some traders to adopt a strategy of selling volatility before earnings reports, rather than following market sentiment for directional bets. VIX signals a divergence in sentiment with oil prices Wednesday's market showed a rare divergence in sentiment: Brent crude oil surged over 4% due to the event of Iran seizing tankers, while the VIX index, which measures fear in the US stock market, fell instead of rising. Normally, a surge in oil prices caused by political turmoil at GEO Group Inc would simultaneously boost the VIX, but traders now seem to no longer view the threat of an Iran war as a main threat capable of shaking the foundation of the US stock bull market. Some strategists point out that this deviation indicates that the market is pricing risk in layers. Energy market participants focus on the actual supply disruption risk in the Strait of Hormuz, while stock market participants tend to view Middle East conflicts as localized, controllable events. A more concerning signal is that when the market begins to systematically ignore tail risks, it often means that sentiment has entered an overly optimistic range.