Wall Street Bets on Magnificent Seven Again! Mysterious Indicator Hints at Biggest Winners of Earnings Season

As the US stock earnings season enters its climax, a little-noticed options indicator called 'RiskDex' suggests that the 'Magnificent Seven' could lead strong post-earnings stock performance and become a key driver for the S&P 500 to challenge new historical highs.

According to the RiskDex indicator compiled by Nations Indexes, call option (Call) demand for major tech stocks has recently been significantly higher than put option (Put) demand. Compared to their own trading patterns over the past year, these stocks are showing an unusually optimistic sentiment, reflecting high market expectations for earnings results.

RiskDex measures the price difference between out-of-the-money call and put options (one standard deviation out-of-the-money), then compares it to the stock’s historical range over the past year to assess market optimism for individual stocks—not just whether calls are generally more expensive.

The analysis shows Meta (META-US) and Microsoft (MSFT-US) leading the rankings, followed by Amazon (AMZN-US), Tesla (TSLA-US), and AMD (AMD-US).

Meta’s RiskDex stands at 0.75, meaning out-of-the-money calls are priced about 25% higher than equivalent puts, placing it at the 91st percentile of bullishness over the past year. Microsoft scores 0.79, at the 93rd percentile, indicating exceptionally strong bullish sentiment.

Amazon’s RiskDex is 0.98—calls are only slightly more expensive than puts, but relative to its own history, it sits at the 92nd percentile. Tesla and AMD both rank within the top 20% of bullish sentiment over the past 52 weeks.

However, Scott Nations, President of Nations Indexes, warns that overly concentrated optimism could become a contrarian signal. He notes that when so many large tech stocks simultaneously show clear call premiums, it means market expectations for earnings are already very high, and stock prices have nearly priced in a perfect scenario. If earnings or guidance fail to exceed expectations, investors could face disappointment-driven sell-offs.

He cites NVIDIA (NVDA-US) as an example: despite previously reporting strong earnings, its stock failed to sustain gains, showing that market expectations for the AI leader were already extremely high.

Nonetheless, if the Magnificent Seven deliver earnings that meet or exceed expectations this quarter, they could reposition themselves as market leaders. Meta and Microsoft are nearing one year since their last all-time highs, and Amazon has underperformed the Nasdaq 100 year-to-date. Stronger-than-expected results could reignite these tech giants as market leaders, further pushing the S&P 500 toward new highs.