December 21st, 2025 | tastylive's First Call

First Call - December 18, 2023: Summary

Key Concepts:

• VIX (Volatility Index): A measure of market expectations of near-term volatility conveyed by S&P 500 index option prices.
• Opex (Options Expiration): The date when options contracts expire, often associated with increased trading volume and potential volatility.
• Santa Claus Rally: A historical tendency for stock prices to rise during the last five trading days of the year and the first two of the new year.
• Real Fed Funds Rate: The nominal Fed Funds rate minus the inflation rate, representing the true cost of borrowing.
• Nowcast (Cleveland Fed): A real-time estimate of economic indicators, used to assess data accuracy.
• Contango (Volatility Futures): A market situation where futures prices are higher than the expected spot price, indicating a normal upward-sloping futures curve.
• MAG 7/10: Refers to the largest publicly traded technology companies, often driving market performance.
• IVR (Implied Volatility Rank): A percentile ranking of an asset's current implied volatility relative to its historical range.

I. Market Overview & Last Week’s Performance

The broadcast began with a review of the previous week’s market performance. The S&P 500 gained 0.83%, NASDAQ rose 0.5%, while the Russell 2000 (IWM) declined by 1.21%. Gold performed well, with a gain of close to 9%, while oil decreased by 1.2%. The dollar was mixed. Notably, volatility (VIX) settled at cycle lows across January, February, and March expirations. December options expiration (Opex) was significant, estimated around 7 trillion in volume. Despite an initially weak start to the week, the market ultimately finished higher.

II. Current Market Conditions & Gap Open

The market opened higher on Monday, December 18th, with the S&P 500 up 18-19 points (to 6905), NASDAQ up 0.3%, Dow up 0.2%, and Russell up 0.3%. Metals showed mixed performance: gold down 0.3%, silver unchanged, and copper down 0.3%. Bonds were down across the curve. The discussion highlighted the low volatility environment, with VIX at approximately 83.

III. The Santa Claus Rally & Year-End Outlook

The hosts discussed the potential for a “Santa Claus Rally” – the historical tendency for markets to rally during the final trading days of the year and the first two of the new year (average 1.3% gain in the S&P 500 since 1950). Last year’s absence of a Santa Claus Rally correlated with a weak first quarter for equities. The low VIX and low volume were seen as potentially setting the stage for a slow, upward push in prices. A target of 7000 for the S&P 500 (or ES futures) was mentioned as a potential level to watch.

IV. Single Stock Analysis & Sector Performance

• Micron (MU): A significant positive outlier in earnings, with revenues of $13.6 billion (vs. expected $11 billion) and EPS of $8/share (vs. expected $3). The stock rose from a low of $221 to $270 in recent sessions.
• Semiconductors: Showed signs of recovery, moving above one-week and one-month moving averages.
• MAG 7/10 Stocks: Discussion focused on Oracle and Coreweave (related to CDS activity), with a rebound on Friday. Tesla was highlighted as a potentially bullish setup, attempting to break resistance at the December 2022 high.
• Low Volatility Environment: The extremely low IVR (Implied Volatility Rank) across the board (S&P 11.7, NASDAQ 13, Russell 3.4) presented challenges for volatility-selling strategies.
• Energy Sector: Mentioned potential for volatility due to geopolitical factors (Russia-Ukraine, US-Venezuela) and thin liquidity.

V. Options Pricing & Strategy Considerations

The December 26th options chain showed a low priced-in move of less than 1%. Given the Christmas holiday and half-day trading on Wednesday, the market was considered to be underpricing volatility. Jamal expressed a preference for waiting for a VIX pop before selling volatility. He currently holds a December 31st call spread on the ES at 7750. He suggested considering short iron condors as a potential strategy given the expected low volatility.

VI. Data Analysis & The Fed’s Role (with Ilia)

Ilia joined the discussion, emphasizing the importance of data quality. He pointed out a significant disconnect between the recent CPI data and the Cleveland Fed’s “Nowcast” model, the largest since February 2020 (during COVID lockdowns). He cautioned against taking the data at face value, noting Powell’s own warning about potential distortions. The real Fed Funds rate was discussed, with the possibility that it is tighter than previously thought, potentially paving the way for earlier rate cuts.

VII. Notable Quotes

• Jamal Chandler: "Mr. Beast is starting a new financial network for uh helping people make good investments. Drumal competition put us out of business." (Humorous comment about potential competition)
• Chris Veio: "I see signs of turning a corner because we're heading into now what will be what could be the Santa Claus rally window."
• Ilia: "This data plainly sucks. It's not very good relative to what we've seen before." (Regarding the recent CPI data)

VIII. Technical Terms & Concepts

• Vivix: VIX of VIX, a measure of volatility of volatility.
• SIBOS: Society for Worldwide Interbank Financial Telecommunication, a data provider.
• Contango: A market situation where futures prices are higher than the expected spot price.
• Nowcast: A real-time estimate of economic indicators.
• Opex: Options Expiration.
• IVR: Implied Volatility Rank.

IX. Synthesis/Conclusion

The broadcast highlighted a market characterized by low volatility, a potential Santa Claus Rally, and questions surrounding the accuracy of recent economic data. While the market opened higher, the hosts cautioned against overconfidence, emphasizing the importance of data quality and the potential for unexpected events. The overall sentiment was cautiously optimistic, with a focus on navigating the thin liquidity and low volatility environment during the holiday season. The discussion underscored the need for adaptability and a nuanced understanding of market dynamics in the current environment.