Global Equity Volatility Insights: Risks rising as NDX nears bubble-levels

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Global Equity Volatility Insights: Risks rising as NDX nears bubble-levels

own the AI race). However, the pace and ferocity of NDX gains has likely left investors Benjamin Bowler

concerned about sharp pullbacks (particularly as the NDX BRI nears 0.8). For protection, Equity-LinkedBofAS Analyst

we caution against very long-dated NDX puts given the potential for dealer hedging of benjamin.bowler@bofa.com

fast-growing NDX-linked structured products dampening put vol. Dec26 is a sweet spot Abhinandan Deb >>

as it covers the midterm catalyst period and isn’t too long-dated to be strongly impacted Equity-LinkedMLI (UK) Analyst

by ‘autocallification’. In particular, we recommend QQQ vs SPY Dec26 put switches for Meriem Hafid >>

1%, saving ~50% vs outright QQQ puts and offering >4:1 risk/reward historically. Research Analyst

BofASE (France)

Nicholas DunneEZ banks upside for post-war relief and rotation tailwinds Equity-Linked Analyst

We believe Eurozone banks remain a compelling asset to position for the next phase of BofAS

Europe’s cyclical recovery as the region looks beyond geopolitics. The sharp SX7E rally Lars Naeckter >>

since the US-Iran MoU has been a reminder of how rapidly flows can re-emerge once Equity-Linked Analyst Merrill Lynch (DIFC)

war concerns fade. Meanwhile, with valuations still cheap and positioning light, there

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may be further upside potential. Moreover, any rotation in a bid to diversify AI/Tech

longs could favour banks given their cyclical gearing to the European economy. Against

Exhibit 1: 3M volatility (weekly chg)

the backdrop of a repricing in US rates weighing on the EURUSD, we see value in Level & changes (in parentheses) in vol pts