When investors talk about the stock market, they’re usually referencing an index such as the S&P 500. Every index is made up of a mix of different stocks, and carry different weightings.
Over time, markets tend to rise because weaker companies in the index are replaced with stronger companies. Such rebalancings occur periodically, and investors who buy shares of companies going into a bigger index can often get in ahead of billions of dollars flowing into a stock.
The Nasdaq 100 just announced three additions. Two are fast-moving tech plays, leaving Axon Enterprise (AXON) a surprising winner here.
The company is best known for its Taser brand of non-lethal weapon, and Axon has grown into other services, including hardware and software for body-cams. That makes them a big player in law enforcement, which should continue to see strong spending over the next few years.
Action to take: Investors may like shares here. Axon is already up 150% over the past year, but its addition to the Nasdaq 100 will bring billions of cash flows from index investors into shares, likely pushing them higher.
For traders, shares are in a bullish uptrend that looks likely to continue. The March 2025 $750 calls, last trading for about $31.00, could see mid-double-digit returns as more money continues to flow into shares in the months ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.