Yahoo Finance

It's now time for some of today's trending takers. This morning we're watching Coinbase, Novavax and Tesla. First up, Coinbase officially replacing Discover Financial Services on the S&P 500. Coinbase is the first crypto firm to join the index. Here's what CEO Brian Armstrong told Yahoo Finance's Jennifer Schonberger about the inclusion.

Coinbase joining the S&P 500 means crypto's here to stay. It's going to be in everybody's 401Ks. Um everyone's going to have crypto exposure, you know, at least indirectly through Coinbase, which is great.

Stock was up more than 30% last week ahead of the inclusion despite news of a hack that is expected to cost the company over $400 million. Still here with me to discuss we have Amy Woo Silverman. Amy, I know you look at the options market when you're talking about individual stocks. What are you seeing around Coinbase?

It's really interesting because I think just what Armstrong had sent there is very symbolic of kind of old guard being transferred to new guard. Um in terms of Coinbase specifically around the options, it's just this idea overall that if crypto becomes normalized, you're going to really see a change in correlations. And what I mean by that is cryptocurrency in general has really been this risk on asset and Coinbase to some degree has traded along with that correlation, but as it becomes thought of more as just a normal part of what people as he said have in their 401Ks, I think it then people start rethinking its relationship. Maybe it acts like digital gold. Maybe it really is an inflation hedge. We're not seeing those yet, but I do think you start to see investors think of both Coinbase and crypto in general as part of that cohort and managing those risks.

Yeah, something of a change to what drives the trade on that stock potentially. Really interesting. We're going to move on though to Novavax's COVID vaccine getting full approval from the FDA. This after the clearance was delayed when Health and Human Services Secretary, Robert F. Kennedy Jr. raised doubts about its efficacy. The shot is cleared for adults 65 and older and those ages 12 to 64 who have at least one underlying condition that puts them at high risk. Of course, this comes amid record COVID cases in parts of the globe. We got the shares up 10%, but Amy, they were up as much as 18% earlier today. I'm interested in why the street sees this as such a big catalyst for Novavax.

Yeah, I think it's just comes down to what was priced in prior and then the surprise that they got so it perhaps that had something to do with it. I will tell you in general when you think about not only the options for Novavax, but U&H for healthcare, it's been incredibly elevated when we look at our liquid universe of all sectors. Healthcare has across the board had held the most uncertainty related to what Trump has hang, but also related, I would say to just much more idiosyncratic risk related to a lot of these factors like FDA approval or maybe the disapproval of a trial that you don't get in other stocks.

Perhaps a signal of how much policy uncertainty there is in that sector.

So much.

Yeah, absolutely. Really good stuff. We're also going to talk about Tesla leading declines among the magnificent seven today. The electric vehicle maker adding a new board member, retired CFO, Jack Hartung's appointment is effective coming up on June 1st, but Tesla again leading declines in the mag 7 this morning is down a little over 2%. This is always a fun one to talk options on Amy. What are you seeing with Tesla?

So I will tell you Tesla is a name I never want to give up on because when I think back to its options history, it has the most severe form of what we call skew inversion, but it's a really simple way of saying, I've never seen such exuberance in the call options as I have on a stock like Tesla, and that's faded a lot, but we always watch for if that ticks back because that creates enormous amount of momentum in the stock that you have to be careful of. It happens in Tesla, maybe Nvidia, but not very many names exhibit this the way you see in Tesla.

How can investors monitor that?

So take a look at how the call option pricing trades relative to the put option pricing when that starts to go kind of above and beyond what the normal relationship of that spread is, then you're starting to see that momentum build in the stock again.

Really, really important context there, Amy. Thank you so much. For our audience, you can scan the QR code below to track the best and worst performing stocks with the Yahoo finances at trending at ticker's page.