The market’s like a paddling duck—calm on top, chaos underneath, says RBC’s Amy Wu Silverman

Volatility Market Dynamics - The VIX has been muted, remaining well below the highs seen earlier in the year despite events like government shutdowns and tariff announcements [1] - A post-COVID phenomenon shows increased concern about missing out on upside potential, leading to more call options trading in NASDAQ, S&P, and individual stocks [6][7] - The market exhibits underlying moves that cancel each other out, resulting in a calm surface despite the "violently paddling" underneath [3][4] Options Trading Strategies - Historically, downside protection was prioritized, but now upside call options are favored due to FOMO, especially in AI-related stocks [5][6][7] - Currently, the market isn't seeing high demand for downside protection, but this is expected to increase as earnings dates approach [10] - Investors are bidding up call options on MAG 7 and AI tech names, indicating a desire to avoid missing out on potential gains [9] Financial Sector and Shutdown Impact - The options market is pricing in a resolution to the government shutdown before the next Federal Reserve meeting [11] - A week into the shutdown, pricing in financials or the broader market hasn't ticked up yet, but this is expected to change if a resolution isn't reached [10][11] - Proxy ETFs like KRE or XLF are good for owning volatility through calls or puts due to idiosyncratic single stock volatility [12]