The Kitty is Roaring Again - Volatility Is Not | The OPEX Effect: May 2024

[00:00:00] Welcome to the OPEX Effect, a joint podcast from Excess Returns in Spock Gama where we take a deep dive into the world of options and the flows that generate in the markets.

[00:00:06] Join Brent Kochuba, Jack Forehand every month on options, expiration week as they look at the major developments in the options world and how they impact all of our portfolios.

[00:00:14] The only information on this podcast should be construed as investment advice to carry these disgusting podcasts from maybe holding the clients of a big camera.

[00:00:20] So Brent, I'm happy you're still talking to me after having a listen to me for 12 straight hours, a couple weeks ago there in the live stream.

[00:00:26] Yeah, we had a marathon of the vet and we were just talking to a really happy with how it went.

[00:00:31] And stop watching the watch shows charity view, charity day interviews, I should say and hopefully donate a couple of books to Susan G. Coleman Foundation.

[00:00:41] Yeah, yeah, it was awesome. We do have the individual video, some of them are up on Spock Gama.

[00:00:46] We have some up on our side so both live streams are still up so if anybody wants to, you know, still watch it, it'll be up there in the donate link.

[00:00:52] I'm just leaving it live so anybody wants to donate can still donate at any time.

[00:00:56] It is a great cause and yeah, it was definitely an exhausting little more exhausting than I thought it would be.

[00:01:02] I think by the end we were like we were fading a little bit but you would think it's not that hard, but it was just to sit here and talk.

[00:01:08] But after 12 hours, you're fading a little bit.

[00:01:11] Yeah, and you burn a lot of mental energy there.

[00:01:14] Well, you hear some people that are like professional poker players in there for 12 hours and they'll lose five percent.

[00:01:20] Five pounds just because of intensive thought over the course of a day and that's kind of what that felt like, you know.

[00:01:27] Yeah, no for me too.

[00:01:28] A lot of customers.

[00:01:29] Yeah, thankfully we had to just in in Matt helping us as well or we would never would have made it but they helped us get through to the end of the day.

[00:01:35] And absolutely, it got to talk a lot of people who I haven't spoken to before and that was really exciting.

[00:01:41] And where's all we had a lot of fun stuff to talk about?

[00:01:44] Pre-FLMC there and the treasury funding and all that?

[00:01:47] Here we are now.

[00:01:48] We got a couple more data points coming out this week and so some more excitement is just around the corner.

[00:01:54] Yeah, yeah, we got to surprise about it.

[00:01:55] We got through all that stuff without any kind of major, you know, market event of any kind.

[00:02:00] The market seems still, we're just talking before we started.

[00:02:02] I mean, I think we're within 1% of all time highs again.

[00:02:04] The market just keeps cranking.

[00:02:06] We absolutely are.

[00:02:07] So as we talked, we're up 52 20 S&P, record highs 52 65,

[00:02:12] give a take a couple of handles and it's a market that just doesn't seem too worried about the future.

[00:02:18] I'll say that.

[00:02:19] You can see that not only in the all-time highs or just off of all-time highs, but also in volatility.

[00:02:24] People don't want to own puts, they're just, they don't care.

[00:02:26] They're not worried about it.

[00:02:27] And that's really being reflected in the prices that we see in the options land.

[00:02:32] Yeah, I haven't even looked what's the VIXAT.

[00:02:34] I have it's quite low, still, right?

[00:02:36] Yeah, the VIXAT is right around 13 is here which, you know, was still fairly high relative to

[00:02:42] what we saw 12 over the last couple weeks kind of into March.

[00:02:49] But what's interesting about that 13 numbers that realize Vaughan or Laura's,

[00:02:53] how much the S&P is moving is not much lower than that.

[00:02:56] So the premium or the difference between where the VIXAT is and how much the S&P has been moving on a volatility

[00:03:01] basis is really very small.

[00:03:03] In fact, it's like a 10th percentile small which just tells us that there's no premium.

[00:03:09] There's no event premium, right?

[00:03:10] People were worried about hedging the CPI number or some other geopolitical number.

[00:03:15] You would see the VIXAT would have a much higher relative premium there and right now just doesn't.

[00:03:20] You know, people just generally speak or not to worry about the future as we head into the summer.

[00:03:26] Are they like when we see, I think what CPI is what this Wednesday or Thursday or something?

[00:03:29] It's Wednesdays we got Powell speaking tomorrow that we got CPI on Wednesday.

[00:03:35] This is the same days of the, excuse me, that CPI is on Wednesday.

[00:03:38] We have optics on the 15th and then next week we have Nvidia earnings which just

[00:03:42] think is a big event and that's the same day as VIXExperation.

[00:03:46] So you know, a bunch of catalysts kind of stacked up here.

[00:03:48] And you don't see any concern right around CPI or anything like that.

[00:03:51] There's not like I know there's usually like a one day little spike there or something.

[00:03:54] You don't see any of that, right?

[00:03:55] So we have a chart of that here in the presentation about Turkish structure.

[00:03:58] Yeah, and so we could we could talk about that.

[00:04:00] But you know what's interesting is there's a small premium for more for Powell than

[00:04:04] there's a bigger relative event ball premium we call it for CPI.

[00:04:07] So people do care about CPI relatively care about it.

[00:04:11] If you look at VAL 345 months out, it's very, very passive.

[00:04:16] People are not worried about things.

[00:04:18] There's a little ball in VAL around the expiration dates.

[00:04:21] But other than that, we're kind of at 90 day lows roughly in terms of volatility levels.

[00:04:27] And you know, there were some very com periods in those 90 days.

[00:04:30] Yes, April was a little bit, you know, louder and more violent than has been.

[00:04:34] Like it's revolved a little bit.

[00:04:35] But, you know, the context of years of volatility things are very quiet right now.

[00:04:41] The context of years of volatility level status.

[00:04:44] All right. So before I get too far ahead and keep talking about slides that we're going to talk about later.

[00:04:48] We should probably start with what you actually have in the presentation, which is,

[00:04:51] you know, at the beginning we always like to talk about this opx cycle.

[00:04:53] We have options expiration coming up on Friday.

[00:04:55] Can you talk about a little bit about this cycle and why it's important?

[00:04:58] So farther reason we do this, the opx effects when we do is because it's

[00:05:02] right before opx is expiration.

[00:05:04] So opx is expiration is Friday and the way that we view this cycle taking places that

[00:05:09] opx is expire and then over the course of 30 days big positions build up.

[00:05:13] And those could be calls or puts leaning one way or the other could be a fair blend of both.

[00:05:18] Right now, we have a lot of calls building up.

[00:05:20] And with that, we see hedging flows associated with those positions build up.

[00:05:24] And that sort of reinforces flow. There's a lot of reflexivity in that.

[00:05:28] And then when opx is expiration hits, those positions clear out and it allows for

[00:05:33] the market to kind of reset itself for positions to shift and change.

[00:05:37] We see that in statistics where actually doing an opx statistic report.

[00:05:41] We're going to be putting out here trying to get it out for tomorrow.

[00:05:44] And we do see this volatility expands.

[00:05:46] Now we talk about volatility expanding.

[00:05:48] That simply means markets are more free to move.

[00:05:51] It doesn't always mean up or down.

[00:05:52] It just means we're going to get more movement there.

[00:05:54] Been getting. So in this case, we have powildemoral CPI on Wednesday.

[00:06:00] Those are the events that are going to occur into a time when opx is

[00:06:03] are expiring which allows for more relative movement.

[00:06:06] And that's what the general idea is.

[00:06:08] And you can look at this on a single stock basis like a certain name is building up big

[00:06:11] positions or on the index side of things.

[00:06:14] Obviously, like with the S&B 500.

[00:06:17] And so on this chart here, we show a five plus year history of the S&P 500.

[00:06:24] And each exp is an individual expiration.

[00:06:26] So not every single expiration is this big massive turning point.

[00:06:29] Quarterly expiration is teen view, senior big turning points.

[00:06:32] And also what's also what is also an interesting turning point are put heavy

[00:06:37] explorations and the idea is that if people are buying lots of puts that puts on

[00:06:42] negative delta, dealer hedging flows.

[00:06:44] Where does that mean dealerset the sell a lot of shares or futures to hedge?

[00:06:48] And then when those puts expire, the market often rallies.

[00:06:50] And the reason I bring that up is because the most famous ones are December of 2018,

[00:06:54] the Monday after was the low of the market.

[00:06:57] March of 2020, same thing in the Monday after March off,

[00:07:00] this expiration was the low after the COVID crash.

[00:07:02] It actually April was the low of what was the most of all appeared you seen in months.

[00:07:09] Right?

[00:07:10] Um, op-ed ops expiration with the low, which is bounced from there and in a riptire as you can see on this chart.

[00:07:16] So, you know, these ops is explorations oftentimes when they're clearing

[00:07:20] particularly very big one side of positions, meaning all calls or all puts.

[00:07:24] Oh, do you clear out that imbalance of golf and lead to a change in market behavior?

[00:07:28] Yeah, I didn't realize April, like if you look in this chart,

[00:07:30] I mean, April really was like the turning point.

[00:07:32] We had a lot that worked turning points for a while,

[00:07:35] and then April really was the bottom.

[00:07:37] Yeah, and we've been particularly in the SBA for a pretty neutral, right?

[00:07:40] Like yes, there was more call.

[00:07:42] But a lot of the focuses have been on single stocks and you know,

[00:07:45] has been a relative limber I guess, on the position size that we've seen really over the last

[00:07:50] past six months.

[00:07:51] But April because of how sharp the market moved down ahead,

[00:07:54] build up a lot of puts and and vaults, so he was relatively high and once you clear all that out,

[00:08:00] you know, we clear out those positions and then we got a little bit of a dovish

[00:08:05] Fed print and CBI prints, he can be fed statement after and that just allows the market to really rally because those positions are out of the way.

[00:08:13] And the market can, can retrace.

[00:08:16] So the current area of operation last last in the April we were really looking at bigger positions of the

[00:08:22] 1,5,000 kind of area here. We had our big support level that fits 200.

[00:08:29] That was the high recent high last week. We've now moved up to just 50 to 20 there,

[00:08:34] but now what you can see is that it's become real two sided strike and what I mean by that is

[00:08:39] the orange line which is called gamma in the blue line which is put gammas very even now. So we see that as

[00:08:44] a real support line. You can also see 50 to 25 and 50 to 50 that you know the game is all stacking up at this area.

[00:08:51] And this has been a real what we were forecasting is the high and the options expiration.

[00:08:56] Now it's going to happen at expiration. We're going to reduce the size of these positions by about 25 to 30%

[00:09:01] which means that the market kind of move again and things can reset.

[00:09:07] Which should allow for some more, again fluidity or more volatility relatively to pick up.

[00:09:12] Yeah, it seems like we always have that must be 5,000 that other one outside of your little

[00:09:16] out of sight of the cylinder. It seems like we always have those round numbers. We always have

[00:09:19] decent activity. Yeah, that's a huge strike. It was a huge strike for a long time. It was a

[00:09:23] huge strike before it visited that level into April, apex. The load was 42, 85. It's

[00:09:29] 2049, 85 somewhere around in there. And there's some big, biny-insing position box trades we call

[00:09:36] them the sit there which have nothing to do with sort of directional bets. But there's also just a lot

[00:09:41] of other two two way to side of positions will call it. And accordingly the market hit that level and

[00:09:47] it really stuck. There's also the JP Morgan collar trade which we stock about a lot. That's struck

[00:09:53] at 49, 80 right there, 49, 75, 49, 80. So that's a little bit kind of support level just

[00:09:59] in the general vicinity and the market bounced right there and held, again, apex cleared out

[00:10:04] a bunch of these positions and we rallied. And so if we do get weakness out of CPI,

[00:10:10] if Paul comes out very clockish tomorrow, then five thousand areas will have to

[00:10:16] think we're going to visit probably pretty quickly in the event of a hot reading because people

[00:10:20] are positioned for that hot reading at all. So the idea with a level like that, it acts as resistance

[00:10:26] but if we were to break through it then that becomes bearish right? And we're likely to accelerate

[00:10:31] to the downside is that the idea? Yeah that is the idea and so the way that this sort of

[00:10:36] works in my view is that you kind of got to get the energy to catch hold right? And a lot of that

[00:10:42] is either you get to get the dealer position big enough that they're driving things. So in other

[00:10:47] words that they start to short the market, that that flow get big enough that it becomes the

[00:10:51] major driver of the market. And I think if you break 49, 80, 80 area which is where that JP

[00:10:57] mortgage strike is then those flows, those dealer flows can really start to pick up in a way

[00:11:01] that drives one side of market action right? And that's what makes the VIX spike and the like.

[00:11:07] A lot of these other strikes that are balanced, let's say they're balanced, they have a lot

[00:11:10] of calls and puts, you know, the flow becomes balanced as well right? You get a little bit of

[00:11:14] shorting under that level and it kind of pops back up and laying up more rotating around those

[00:11:18] big stripes as opposed to seeing one way movement. So again that's why this valve is important

[00:11:25] in two point jack, we get below that really 49 75. It's where we break the pull that 5,000

[00:11:32] and the flow should become much more you know, omnidirectional right? This just starts selling

[00:11:36] flows, VIX spike, you know that's where things can get come nasty. Just one more for a good

[00:11:40] next slide like are these levels now that there's way more options activity out there? Are these

[00:11:44] levels like more important than they used to be? So if we looked at this like five years ago,

[00:11:48] I assume both lines would be not nearly as tall or both directions as they are. Does that mean

[00:11:52] that the levels become more important because there's more going on there? It's very interesting and

[00:11:56] you bring up a good point there's two things about this. So 50% of volume in the S&B

[00:12:00] government are now zero DTE. That means those are contracts that expire today. They have very

[00:12:04] little position to start the day, it's just a bunch of volume that takes place. And so

[00:12:09] that flow in our view and all of our studies drives mean reversing the market on a daily basis.

[00:12:14] Right? And so that means that if we rally in the start of the day, the market turns to sell

[00:12:18] off and at the market dips it rallies back. We saw that actually even through the weakness that

[00:12:22] there was relatively less kind of interday ranges or lower volatility. Now there's still

[00:12:29] these bigger positions. So the big funds will still position at 30 days, which is the monthly

[00:12:33] expiration and then the quarterly expiration is with the biggest. So we still have these cycles

[00:12:37] and those cycles still matter because there's these big game of positions. But what happens

[00:12:41] now is the zero DTE people will anchor to those strikes that already have a lot of open interest.

[00:12:46] And so I think CED faster cycles. So like the volume of all is higher now

[00:12:52] because you get these zero DTE flows that come in or go on. And so, you know, you look at

[00:12:57] like today we have big gamut 5000 big gamut at 520 which is the spider 520 level. And you see

[00:13:05] all the zero DTE flow coming blah, blah, blah, blah, blah. Those strikes right hit. So there's a lot of

[00:13:12] like you end up with zero DTE traders. You're really being able to use this information

[00:13:17] I think strongly and then monthly traders have a lost success but then they'll get those

[00:13:21] tweeters. Like your folks is a few days out. Things get a little murky for you.

[00:13:25] Business, obviously. Okay. So on this next slide we had actually made a big left move for a while

[00:13:30] where thinking we might get a little volatility. Now we seem to be way way further right.

[00:13:34] Yeah, it's a march. It's going to be an Aprilopx. The line what we hear was just below one

[00:13:39] and that work has had a lot more real to volatility. And what was interesting is we had put

[00:13:44] out this presentation about ball suppression designed on the blog. We're talking about the

[00:13:48] streaks of days without a 2% move up or down. There was always signals that things were kind

[00:13:54] of like starting to crack a little bit and that volatility estimate was much higher because when

[00:13:59] we slide the lower on this chart towards the left it infers that we get more forward market

[00:14:04] volatility. So it's a predictor. Now we're very extremely way up to the right which means

[00:14:09] that there's no signal that today or tomorrow we're going to have volatility but as we know

[00:14:13] we're going to get expiration which is going to clear out some of this game and it's going to

[00:14:17] make this index the level on the index current reading which is about 1.75. We're going to shift

[00:14:22] towards one because we're having options expire. Options expire reduces the positive game we have

[00:14:28] in volatility should increase in kind. So on this next slide it may is not a major effects.

[00:14:35] 100% you can see June is the big one here but it's just the size of positions we refer to

[00:14:40] those big funds you have biggest funds in the world can't day trade right there positions just too

[00:14:45] are so they'll tend to position at the quarterly expiration so that's which we see here where

[00:14:49] June opx is about three times bigger to the three times bigger than the May and may has a lot

[00:14:55] of call positions now simply because it's a function of the rally that's the best supplying

[00:14:59] big positive game in the way that big big not big positive big positive game is that's

[00:15:05] suppressors volatility and that's the environment that we're going to right now. So we're looking

[00:15:08] for at a minimum small positive game a decline of positive game readings and a little tick up

[00:15:14] in volatility is the base case as a result of which is here in our screen. How do you think about

[00:15:19] I remember June I interviewed Jim Kerson at our charity day and he was there were some

[00:15:23] expressions earlier in the year that he was concerned about like the window of weakness around

[00:15:27] that if things have gone the wrong way they could be significant from the market but I think

[00:15:29] he's less worried now going forward like how do you evaluate these types of expressions. I mean

[00:15:35] obviously the size is probably one thing that's important in terms of it could be like a turning

[00:15:38] point but how do you think about them like that? Yeah the the window weakness thing is funny because

[00:15:44] that and we did a member Q and A earlier today and someone else nearly had the same question so

[00:15:49] it's kind of funny and if you think about 2021 the market went up just like a rocket ship

[00:15:55] the whole year and people would buy tons of call options and then at opposite expiration the market

[00:16:01] would get a little bit weak in the days after opposite expiration and then that dip would be bought

[00:16:04] more calls would come in and that happened just every single month right and I think that's where

[00:16:09] this idea of window weakness really started to grab hold because all that call buying would come in

[00:16:16] and then again when those calls go away the market would get a little bit weak and you

[00:16:20] get there's your window weakness. I think you should frame it as a window

[00:16:23] probability and if you look there's very compelling data that says that the market tends to be

[00:16:28] less volatile into opposite expiration whether or not there's a lot of calls or puts

[00:16:32] humans or something in balance tends to be less volatile into opposite expiration and more

[00:16:36] volatile after so be just look at how much movement we're getting now is there a catalyst for the

[00:16:41] market to rally or so off now if we're losing a bunch of puts right then then I think there's

[00:16:46] often times a lot of hedging flow it causes a pause and volatility which leads to buying

[00:16:50] you know this is our vein off flows there's a lot of reasons for the market to balance

[00:16:54] and reverse after options expiration when things are very negative. When we have this

[00:16:59] situation where there's a ton of calls expiring this is like in this situation we're going to

[00:17:02] lose a bunch of calls but that's going to come into the CPI data and video powers because if all

[00:17:08] those are our dovesch or bush for the market then the function of losing calls allows for

[00:17:14] a little bit of market movement so we could slide up to 53 hundred which were technically

[00:17:18] the volatility because we really haven't had a 1% movement a couple of weeks now and then we would

[00:17:22] just get positive game which is blama on again right we just sort of get back into this grind

[00:17:28] right because calls are going to get sold this is going to just build back up and then it's

[00:17:31] going to be business as usual so there's this window for volatility to expand right and that happens

[00:17:38] to the upside or downside in this scenario. Now I mentioned the upside if we go to 53 hundred we just

[00:17:42] kind of enter the grind again we talked about 52 hundred before this is a real chance for the market

[00:17:48] if it breaks 52 hundred then we could have several days right or weeks of expanded volatility. So

[00:17:54] that's how I like to look at it volatility expansion and if you can get a directional link out of

[00:17:59] the way that people are positioned or events then that plays into the volatility expansion.

[00:18:04] So it's less about weakness and it's more about we're free to move around more.

[00:18:08] Yeah I think the weakness comes to when you see that people are really skewed so

[00:18:13] you know you have a situation like in GameSoft so 100% right tons of Friday options are trading

[00:18:19] people are just buying calls buying calls like it's very skewed when you have that event

[00:18:25] long calls it's 100% long calls going to expire then stock will technically get week around

[00:18:29] that right same with puts when everyone's long puts and they expire that leaves to the mean or

[00:18:33] version. In this case people are mainly short called NSMP and so you know that opens for a little bit

[00:18:39] of volatility but we need a catalyst right to make that volatility really extend over several

[00:18:46] days as opposed to just a short window where things move around a little bit more and position

[00:18:50] basically reset and then we continue business usual which is kind of what my forecast is here like

[00:18:56] past Powell past CPI no big deal and then growing continues. Yeah on the GameStop thing I saw

[00:19:02] we're in Kitty had treated some sort of red arrow today I don't even know what he's talking about but

[00:19:05] it went crazy on Twitter so I don't know if you've talked about GameStop or you're not

[00:19:09] that smart enough to figure out what he's talking about but we need more forward in this chair

[00:19:12] and like I'm interested now or something and so GameStop was up but what are 200% pause

[00:19:18] several times and yeah so somehow he was referring to GameStop in the tweet with that.

[00:19:22] You know so interesting about this from my perspective though is for for a brief moment in time

[00:19:28] when in April and things were very weak things turned to the macro right people were very worried

[00:19:32] about you know what's the next doing you know what's happening the market overall geopolitical

[00:19:36] race that are up now so the conversation is just totally gone away and if you see games

[00:19:41] of up 200% that's a sign of risk taking in speculation in the market which is I think healthy

[00:19:48] if you're just a poll right because that tells me that there's a risk appetite out there in other words

[00:19:54] the more focus is on single stocks I think it's a better braver for the macro environment I guess

[00:19:59] is what I'm trying to say. I'm just curious I don't want to get too off of track here but is that

[00:20:03] like is that 200% is options playing probably a significant role in in that happening?

[00:20:07] It's very very large options volume today I mean the implied wall I looked and it was you know

[00:20:11] the the market's getting halted that stocks being halted a lot so the walls can get skewed but I was seeing

[00:20:16] numbers like 400% in the implied wall which is just absolutely insane and so the stock keeps

[00:20:21] getting these volatility halt which misses with the options market a little bit but you know we're

[00:20:27] seeing very very large levels of calling nothing like 2021 but you know clearly they're

[00:20:33] very elevated that not only in games up but also in c which has nothing to do with games stop but

[00:20:38] it's just a funny word in a world where basically somebody tweeting someone sitting forward

[00:20:42] in a chair because basically cause the 200% movement is not used as Twitter account I don't

[00:20:48] think in like two years or whatever it is so you know he's coming on a hibernation apparently

[00:20:52] or maybe not who knows I don't know what that means but there's clearly a lot of risk appetite out there

[00:20:58] and lingers varies just yeah well if we'll talk about what's the happens with maybe in a future

[00:21:03] episode we can dig into that a little bit more yeah I'm so so yeah or what's moved so you're

[00:21:07] going to talk about what we talked about last time and how things played out after that yeah

[00:21:11] so and in early appeal if you go to our blog spot game.com and click free resources there's a

[00:21:16] we did a article about the lack of volatility in the market and one of the highlights was the

[00:21:21] streak of not only lack of down days 2% down days but also lack of 2% up days and we just we picked

[00:21:28] 2% as a bromber for you know a several standard deviation move in markets but we just didn't get

[00:21:35] major down days and we compared it to previous very odd periods or unique periods in time

[00:21:40] and so this presentation put on 47 obviously volatility to expand quite a bit to

[00:21:45] mixed spike to 19 is interestingly enough we didn't actually get a 2%

[00:21:49] in today down move despite the weakness that we had so so still didn't quite get this full

[00:21:56] you know if the lack of a better term puke like so to get that capitulation day whatever you want to

[00:22:01] call it which is interesting but certainly volatility did increase now a lot of those flows

[00:22:06] we believe were driven by a systematic call overwriting so we talked a lot about that and

[00:22:11] there are episodes please go check that out and zero d t e flows it those are both

[00:22:16] combining to suppress volatility now if macro set is going to come out and sell because rates are

[00:22:21] going up or whatever the narrative is you know those macro flows are still possibly said

[00:22:25] to determine direction but I think the office market was determining how volatile or how fast it

[00:22:30] is that we get there right and if if we overshoot you know expectations as well what on me

[00:22:35] but as like macro wants to start selling their stocks off to go and reweight to bonds or

[00:22:41] whatever other asset class the market is going to go down and if people buy puts we're going

[00:22:45] to go down faster right and if zero d t flows aren't there to kind of buy into dips we're going

[00:22:50] to you know we wouldn't normally go down faster so you know this fact that we're still not

[00:22:53] seeing a 2% down day whatever it is for 150 some odd days or something like that now is

[00:23:00] to me still very straight so that was the done aim of going into the start of April we thought

[00:23:03] that volatility would ship and and tied to that was there were what we called persistent flows

[00:23:10] at risk of unwinding so lotals are what we just mentioned we're going to touch on these today

[00:23:13] but there's been a lot of big single stock flow so people focused on the semis and AI that was

[00:23:18] the theme and the march you know heavy call skews we call that all these things and then as soon

[00:23:23] as volatility poked its head out people were very focused on macro right correlation shot up which

[00:23:28] means all stocks went down uh obviously volatility increased measure of dispersal started to shift

[00:23:34] so if you think about you know how good the the chip sector AI trade was going into March

[00:23:39] really and and and a April um and how much those names are outperforming the broader market that

[00:23:46] outperform its reenreverited hard right into this gap or so off and we seem to get a pause you know

[00:23:53] in the in that relative trade meaning that yes AI and chip stocks sucked bounced you know pretty

[00:23:59] strongly over the last couple of weeks but they're not accelerating away from the whole market yet

[00:24:04] I think in BD could trigger that but but there was a reset in some of this uh dispersion I guess

[00:24:11] I would call it that we saw into into April we didn't get a 2% up to either did we so there

[00:24:16] is this streak still holding on those sides you know that we did we did get one it was after

[00:24:21] it in video earnings so in video had blow up earnings in February and that was a 2% update okay we haven't

[00:24:27] had a 2% update I don't think we have since uh so you know there's one little blip there but

[00:24:32] technically the streak is broken but uh to your down streak is still holding down streak is still holding

[00:24:37] the up streak is uh you know they get ding uh but yeah you're right we we've had a lot of

[00:24:44] successively strong days over the past week like we we had one point I think had six days up in the

[00:24:49] Dow for example which I think was a record to check facts check me on that one but what is like the

[00:24:54] string is like every day is like bye bye bye bye as opposed to getting like a we just made 4% today

[00:25:01] you know one single day blow off we end up getting like you know four days of half percent little

[00:25:05] kind of thing so on the next slide you're talking more about this idea that April marked the low

[00:25:10] yeah I mean it was it was really to the day and uh and I like mark in these things because you know

[00:25:16] off thoughts we've just don't see it and so like when you have an event like this where you

[00:25:20] lose big put positions you know you really see that they're kicking in and then so we're going to

[00:25:25] approach here mayopics and what's going to be so fascinating is if we do get we could get an

[00:25:33] interesting kind of path dependency right if CPI's hot palat kind of hawkest and the mark could

[00:25:38] actually get pretty weak pretty fast uh into uh March-opics so in March-opics and the thick

[00:25:44] expiration and if the if Vix is in balls really high into those events that I think it could change

[00:25:48] the dynamic what could happen over the next couple of days I don't think you know I'm not a macro

[00:25:53] forecaster I just think generally speaking you want to bet against these these prints meaning something right

[00:26:00] tail prints you just want to bet against them I think uh it has a as a general idea

[00:26:04] we have a different the Vix expiration and optics are different ordering this time

[00:26:08] belt it's a what they have in the six place the the Vix is about half and half Vix

[00:26:12] but Xperia's before optics um and we find that ball till he's much higher doing those periods

[00:26:17] then if the Vix takes place after optics okay and this time it's reversion last time is that right

[00:26:23] correct so okay next we is uh in bany earnings and Vix expiration or when's it

[00:26:28] the Vix is low you know 13's and then I think the Vix expiration is not all that interesting to

[00:26:33] talk about it's one of the Vix is very high say 15 plus where I think there's actually much more

[00:26:37] noticeable market impact yeah I would assume like back in 2020 like the Vix

[00:26:41] expiration is significant when Vix was going crazy um yeah and even in 2022 we saw we would see

[00:26:46] very strange rallies on the Tuesday before expiration so Vix expiration the contracts it's

[00:26:50] higher than 930 open on Wednesday um and so you see a lot of positions shuffling on the Tuesday

[00:26:56] before as a result and there were some very unusual market rallies that occur uh when the Vix is

[00:27:01] very high because I think that ball gets kind of so off and it pushes the stock market up

[00:27:06] on that day before Vix expiration it's a it's a flow we've noticed for sure the problem is

[00:27:11] is you know statistically speaking excuse me there's not all that many Vix

[00:27:16] expiration where the Vix is really inspiring right so you can go okay like we have a sample size of

[00:27:20] three you know we rallied three of those times like if you want to bet the farm or that yeah I don't

[00:27:25] know but here's Vix expiration you know just again that kind of marked the high there with the

[00:27:30] a people equity opx um really clean the deck involves it on slam right I mean the Vix went

[00:27:36] directly from 19 down to 13 and now you see the Vix is bouncing a little bit here as traders are

[00:27:42] waiting for the CPI and some of these other interesting events take place in the next couple of days

[00:27:47] yeah on this next slide we're talking about correlation it's a funny story like when you and I were

[00:27:50] interviewing Mandy Zoo um thankfully you carried that interview because she was so smart like about

[00:27:55] all this stuff that she was talking about dispersion and correlation and I was like Jack please be

[00:27:59] smart enough to ask a good question like one good question like come up with something because I

[00:28:02] couldn't it was well over my head like the type of stuff you were talking about I finally got

[00:28:06] something into the end that it was probably not that intelligent but yeah I would recommend anybody

[00:28:10] take a look at that interview too but now we can go into your discussion of correlation

[00:28:15] you know I mean this say you know intelligence is shown by how well you can teach something and

[00:28:21] and she really just outlined those those topics so beautifully there was no check those out

[00:28:26] because you know the questions really were around hey Macau can it can not options investors right

[00:28:32] macro folks those of a long view look at measures of correlation and dispersion and you know extracts

[00:28:37] some information and so you know this case what correlation here is measuring is this is three

[00:28:43] month correlation so what is the implied correlation in all words how much do we think all stocks are

[00:28:47] going to move together so what this does is looks at the implied volume of the top 50 individual

[00:28:51] stocks in the S&P 500 at their implied walls and comparison of the S&P so the lower the

[00:28:56] scope means that single stock implied balls have a higher relative level than the index which

[00:29:01] simply means people think that single stocks are going to move a lot more right relative to the

[00:29:06] index uh and that's a condition that I think again like I said before a lot of people go well

[00:29:10] will know duh but this is a lot more than than we're historically accustomed to and so this

[00:29:16] measure of three month correlation is at all time blows but into apropics like you see here it

[00:29:22] had dropped really low so as soon as that vapor weakness came this correlation measure snapped higher

[00:29:28] because everything started to move focus moved macro semi stocks and AI stocks stopped outperforming

[00:29:35] and right now I think we're sitting in this moment where it's like everything is I was a fairly

[00:29:41] valued and we need a narrative to blow them onto if in video earnings are blowout then it's like

[00:29:46] great let's all jump back on this AI train the semi stock train whatever it is and we can start to

[00:29:52] build this correlation back to lows and those semi stocks up before um if it's look rates can really

[00:29:58] come down sharply now because of CPI then maybe different sectors pop their heads up like small

[00:30:03] caps or whatever um but if the market starts to get weaker and we see this correlation move come up

[00:30:09] then I think that's a signal that the macro concerns are really picking up and and that has

[00:30:15] bad implications for a lot of stocks that were outperforming right they should really start to

[00:30:19] come in quite a bit harder if we see these correlation measures start to increase and correct

[00:30:22] me from wrong but maybe we're talking about the idea that like in this recent decline correlation

[00:30:26] didn't rise like you'd expect it to right like you'd expect they always say like correlation goes to one

[00:30:30] into decline but it didn't really happen as much in the recent decline is that right?

[00:30:34] Yeah that's right so if you look at this big spike back here 2020 correlation really jumped

[00:30:40] and the big smootze was a 80 or something right and that's because every single stock that's

[00:30:44] sold it didn't matter what it was it got sold right uh you know banks and cruise lines and

[00:30:50] whatever everything as people at all equities were up because decouplees were getting sold

[00:30:54] and then people are rotating into more safe assets so that's extreme correlation now in this

[00:31:00] case to her polite correlation increase but think of that crazy right and I think what a lot

[00:31:06] of that is is there's these macro concerns but then there was a lot of single stocks that

[00:31:10] there was a lot of single stocks that were outperforming the downsides so like Nvidia went from

[00:31:15] outperforming really sharply in the semis they were down much sharper than the broader market right

[00:31:20] so you got you got some correction in some of the what would say like dispersion that the market

[00:31:26] uh had as a signal into April and if some of these things are a little bit confusing please go

[00:31:31] to spot game dot com there's we were all whole blog about dispersion correlation and you can

[00:31:35] really dig into some of these metrics as well as the may be zoo video from the sea boat on your

[00:31:40] on access returns uh YouTube yeah but it's in the uh I think it's just in the live stream right now

[00:31:45] but we are gonna put something one of our channels we're gonna publish the individual one as well

[00:31:48] awesome so yeah moving to our what is moving looking forward instead of back what you got

[00:31:54] so uh this you know obviously April was about the ball to the spike right and we bounce

[00:32:00] violently back from that volatility spike and what is happening now here's our from our ball

[00:32:06] dashboard this shows you two things interestingly here we have uh one month S&P skew so this is the

[00:32:15] implied ball readings from one month options in gray it is a little tough to see here but there's

[00:32:19] a shaded gray cone there that shaded gray cones is the is the statistical range at the time for one

[00:32:25] month skew and as you can see into mid April which one the market was testing 5000 and the things

[00:32:30] were very volatile that skew reading you can tell at their jacket it's above the one month

[00:32:34] excuse me 90 day range right so it was very high relative implied ball which makes sense because we were

[00:32:40] at 5000 the market was down you know five six percent into that period you know before a little bit

[00:32:45] worry now what's happened in the green line if you look at one month skew we are now at 30 day

[00:32:51] excuse me 90 day lows right that's what that green line of sound else and it's below its green

[00:32:57] you can also just compare the gray line to the green line and see that we're clearly much lower right

[00:33:01] and so what this is is ball tilt is coming way down uh the shape of skews not shifting all that

[00:33:08] much meaning people aren't really buying or selling necessarily out of the money puts or options

[00:33:12] it's just that ball writ large is just really deflated um and this is a risk on environment this is an

[00:33:17] environment where people just aren't very worried about the future what's interesting to me they didn't

[00:33:21] get that panicked into the teeth of the selling in mid April you have fixed one to 18 but that wasn't

[00:33:27] you know that crazy skew never really what that crazy it just seemed like there were kind of like

[00:33:31] 2022 there which was not as big demand for options despite the geopolitical concerns and the

[00:33:37] ray concern so um and just for anybody who's not familiar skew is a function of the demand for

[00:33:43] puts relative to demand for calls is that right well there's a couple ways to look at it you can

[00:33:47] look at how this uh this curved shifts and the idea is that if there's demand for puts right then skew will

[00:33:54] lift so people are buying you know 20% of the money put options the implied ball for those

[00:33:59] for that level of options you know should increase which would steep in skew um and same thing

[00:34:05] to the calls right so they're independent of each other uh but you would see the skew or the the

[00:34:10] shape of these lines would uh steep in our flat now based on demand to okay so you can look at a

[00:34:15] single stock you know S&P always has very heavy puts you right puts always have a much higher implied

[00:34:20] ball than a than a call so like a 10% put as a much higher implied level of level than a 10% call

[00:34:26] you can look at another name like GameStop today and you'd see the opposite right calls that I have

[00:34:29] a much higher implied ball than puts um so it's quite often in single stocks and dear point it's

[00:34:34] it's often supplied demand driven yeah in a sense the in the takeaway from the smoke too is when

[00:34:40] when you see ball gets squashed like this it's a signal that uh I don't know jump to this other

[00:34:47] slide it's that that's what we call oftentimes vana flows right and I thought I had popped a chart

[00:34:51] and here don't see them here but with the vana flows are simply when implied ball changes

[00:34:56] we believe in the options space that that drives underlying hedging flows which moves the market

[00:35:01] and so when you see that gray line shift down to where the gray line is that's wall getting

[00:35:05] squashed right and that leads to flows up boost the market oh and so it's interesting is we had a pretty

[00:35:12] neutral level of volatility last time we're in this area 5225 right ball spiked

[00:35:18] we sold ball back off to where it is today and the market basically just is at the same level

[00:35:22] right so we're just did this round rob and not only in terms of the SB 500 but volatility writ large

[00:35:28] uh I mentioned before we talked about at the very start of the presentation there's a small

[00:35:32] implied ball premium for power speech tomorrow and you can see this little data point here but

[00:35:36] more so for the CPI the CPI is with the market is hanging on you can see it because

[00:35:40] this is what we call term structure for the S&P and each one of these each expiration has a

[00:35:46] implied ball data point so the implied ball data point for CPI reading on Wednesday's higher

[00:35:51] than every other data point in this curve which tells us that that is the that is the reading

[00:35:55] that traders care about um and then what's also interesting about this so CPI matters uh we're at the

[00:36:02] bottom of this shaded cone which is the 90 days statistical rate so when you look out in mid-June

[00:36:07] mid-A plus he's mid-June mid-June mid-June mid-June this these implied ball reads are at 90

[00:36:14] day lows nobody's worried about the future so you're talking a 12% in quite a while which is like

[00:36:19] people forecasting you know 675 basis point daily moves in the SB very benign right people just

[00:36:25] aren't not worried about what's set to happen now you know two three months in time uh it's a real

[00:36:30] kind of risk on market it to that point you know you can look at this market as there's a little

[00:36:35] bit of tail-hatching in case that CPI print comes in hot but no one's really positioned for

[00:36:40] like a record CPI we're suddenly people okay like rates are gonna stay higher for a lot longer now

[00:36:45] we got a really shift to that mentality which you know people aren't hedged for that then the

[00:36:50] likely hood of a big down move happening increases in my view right like if you're expecting a big

[00:36:55] move down and everyone's hedged for it it makes it harder to actually for that move to manifest

[00:36:59] yeah and people aren't that hedged I mean basically the what's been happening with every CPI seems to be

[00:37:02] slightly hot which hasn't caused major moves but if we got really hot um or really you know well

[00:37:08] low I guess we would have to that would be interesting to see how that plays out. Yeah um uh what 100

[00:37:13] percent in power speak and you know this week he speaks next week you get FOMC so you know we're gonna

[00:37:17] continue to get these numbers and I just think that unless the market is just you know really just hit

[00:37:23] over the head with with a hot inflation number that it can't explain away you know then what happens

[00:37:28] is to the point of vana flows people go okay CPI didn't really mean anything sell that extra

[00:37:33] wall that had been built up sell these puts that queer holding and that helps to push the market up

[00:37:38] and that's why I think if the reading is benign then then 50s re-hunter by Friday I think is what happens

[00:37:43] together it's always funny with inflation too there's so many ways to slice and dice the number that

[00:37:47] like no matter what your opinion is if it's hot if it's cold like you could always come up with something

[00:37:50] you can do the three month annualized the six month annualizing exclude this that and the other thing like

[00:37:55] there's just you always see both sides no matter what the number is like being out with

[00:37:58] there I've dissected the data and here's what supports my opinion yeah and I think it's so hard to

[00:38:03] navigate all that you know I don't envy the macro uh folks out there because it's such a changing

[00:38:08] dynamic picture and I'm like looking at the apply vault because that tells you what the market

[00:38:11] is expecting what the market is pricing in um like to the point you know we're they're pricing in

[00:38:17] four five six cuts right at the beginning of this year and now the markets may be pricing in one

[00:38:22] sometime out the future but we're still at record highs in the S&P so it's like cares right and that's

[00:38:27] and that's what when I look at this people are saying we don't care uh that's what I look

[00:38:31] that's what I see in the implied ball space and so you know it's fun to talk about this on Twitter

[00:38:35] and all this stuff but I think overall the message I get from the market is unless it's a tail

[00:38:39] print and CPI we don't really care it if you don't care I think the natural moving of the market is

[00:38:44] drift higher that makes sense I love this next slide what are you seeing this this is always interesting

[00:38:48] I mean like looking at cross asset volatility what do you see there yeah this is from the

[00:38:53] aforementioned made use uh volatility uh dashwork specific once a month we go to CBO somewhere in CBO

[00:38:59] website you can find it's really great um but you could see that cross asset if you look at equity

[00:39:03] wall rate fall oil effects credit all that spiked into mid April where worried about rates and

[00:39:09] geofauthics like all that is completely mean reverted so balls now back to where it was across asset

[00:39:15] to where we were at the end of march was a very compared the only wall it's still elderly just

[00:39:20] gold interestingly um so that's still quite a bit high and I just think it's fascinating with all

[00:39:24] the talk about rates still SNP balls at lows as you can see down here but when you look at TLT

[00:39:30] LQD HID those are long term government bonds uh what is that high grade and low grade

[00:39:37] corporate bonds uh or pampered debt you know all that walls very low right so

[00:39:43] as much as we all kind of want to rear hands around the affords of upcoming data points ball is

[00:39:49] not doing anything it just does a care and so um again if we just we just get even just even if

[00:39:55] it's a little warm in terms of the inflation I think he was in back i don't care and market goes up

[00:39:59] uh we and we kind of pick up new highs that's where all this data is telling me right yeah it also

[00:40:05] only we do get that tail print though just to add a quick that that ball can travel a lot more right

[00:40:09] so if we break fifty to a hundred and it is a real risk off move then ball's going to travel

[00:40:14] farther than people expect because we're at such lows right we got a we we got a long way to go

[00:40:20] yeah it's interesting because for for a long time like the move was really what was high

[00:40:23] like the volatility was in bonds and now that's kind of everybody was debating you know whether

[00:40:26] the mix was gonna follow and whether volatility and equity was gonna follow and you know now

[00:40:30] bound volatility is come down a lot from where it was yeah yeah yeah that's exactly right and so

[00:40:35] you know it's like i'm positioned now to for a market route of 5300 in friday and then I think we'll

[00:40:41] depending on the video we'll then you know maybe make a second link but in this environment

[00:40:45] where vault already low you can wait to see that first shot across the bow right if we break

[00:40:49] fifty to a hundred and vault starts to increase then you can afford to go again now i'm gonna enter some

[00:40:53] puts because this could go a lot farther as opposed to having to hedge before the event if that makes us no

[00:40:58] make sense and and what's also interesting to this to this point about it being a fair value or mutual

[00:41:06] call volume in blue and it's put volume in orange and what was interesting is we had

[00:41:14] very near record highs or at least a very significant spike i should say in single stock put

[00:41:19] volume which is what these orange spikes were into the April weakness and actually if you took

[00:41:25] call volume the put volume is subtracted put excuse me put volume subtracted call volume

[00:41:30] we actually saw this spike we put on Twitter we saw this spike now like hey this look really

[00:41:34] looked like over bought put your over bought right and what i feel i need to speak about this

[00:41:39] is that call buyers on this dip didn't you know they they they came in a little bit but this is not

[00:41:44] a a a real breakout right a real persistent increase in call bonds people are waiting for signal

[00:41:51] right now just as they're not worried about i think you know two free bounce out in time

[00:41:56] they're also not showing that they're terribly interested in getting wall right now either so i

[00:42:00] think what do you more waiting is for like a narrative or like a clearing and so you know that

[00:42:04] clearing comes up pals you know neutral if see guys neutral if and videos like hey we're making

[00:42:10] more money than i think then some of that call volume picks up and we get that signal uh

[00:42:15] you know a bull market sort of phase two kind of thing uh can really kick off out of bull this

[00:42:21] yes on this next chart looking in video just in on a separate issue with them it was interesting

[00:42:25] talking to g monster um and i'm putting about this because they were you know they're kind of behind

[00:42:29] you know we're looking at this stuff they're behind the scenes like in the tech world like investing in

[00:42:32] this stuff and you know just interesting like seeing them talk about Nvidia and talk about AI and you know

[00:42:37] where they think the future is um you know yeah i think that that's interesting because i don't know a lot

[00:42:42] about the behind the scenes stuff on this tech group um new button and they said that the remote video just is like

[00:42:49] if i i'm paraphrasing it but they're like fairly valued huge mode is kind of what i took from that

[00:42:54] conversation i go listen to your you know everyone please yourselves uh

[00:42:58] guess i got that a little bit wrong but that was my takeaway from there from their conversation

[00:43:01] yeah it's interesting just on the fundamental side which is a little outside of what we talk about here

[00:43:04] but like Nvidia went up a lot but it's it's like earnings a ton too

[00:43:09] like it sales this is not like a 1990s dot com thing where like not much was going on on the revenue side

[00:43:15] but the stock would crazy like this you know who knows whether i have no i'm not smart enough to know

[00:43:19] whether they're staying power to it or if anybody can compete with them eventually your prices will come

[00:43:23] down or anything like that but it was like they're their fundamentals went up a ton as well

[00:43:28] one percent of the last time we you know there are these last two percent rally we had

[00:43:32] so much of our March conversation was about the Nvidia GTC conference and we're

[00:43:37] remember back those like they're Apple and and you remember this relates to the slide here

[00:43:42] remember we were talking about how heavy the calls used were into that event everybody was expecting

[00:43:48] you know just the god portable to come out of that event and as a result you could see calls

[00:43:54] you hear this is the three fourteen calls we survey before that event you could see that out of the

[00:43:59] money calls were extremely elevated in plight volatility term versus at the money right this it

[00:44:04] looks like a escape war ramp going up and that is the may it people were thinking that

[00:44:10] holy cow like they crushed earnings are gonna crush this and i think they i don't know

[00:44:14] maybe they put good products out but expectations are so high that it's almost impossible to

[00:44:18] see those expectations that without their for them right like oh they didn't give us the god

[00:44:22] particle so uh like you know these calls were too rich with so fastening about this time around is

[00:44:28] yes we still have a week for earnings so people can bid up you know these walls a little bit

[00:44:31] but you see a flat skew is right now one months due um the stock is basically back to where it

[00:44:37] was into that GTC conference but the walls weigh lower into earnings which i think is really fast in

[00:44:43] people are not fully bold up in video like they were just a month ago uh well two months ago

[00:44:49] um you know kind of end of the end of March and so in this situation to me i think that if they

[00:44:54] crush earnings like they did before the stock could really run and it could really have staying

[00:44:58] powers what i'm taking away from it you know wall still elevated across the board like the

[00:45:03] surface we called the elevated cousin earnings there's always a little bit of a higher plight ball

[00:45:07] the difference here is you just don't see that call skew and that tells me that there's not

[00:45:11] this big imbalance into call like we used to have um so that could really open an opportunity for the

[00:45:17] stock to rally i think it's a it's a really interesting moment for a video where the expectations

[00:45:23] are what they were but they could still deliver on earnings yeah that expectation is so important

[00:45:27] and like for me as someone outside of options like that often explains why i see something happening

[00:45:32] in the market and it doesn't go the way i think like a company you think beats expectations or beats

[00:45:36] like whatever the wall street expectations but the reality is the expectations you know implied

[00:45:40] but what's going on options were actually a lot higher and you think goes down when you think it

[00:45:43] should be going up like you see that all the time and like learning behind what's going on behind

[00:45:47] the scenes with options has helped me to at least understand you know what that is yeah and then

[00:45:51] you know it's about probabilities and plot moves and those kinds of things and i think that even

[00:45:55] if you don't trade options at all you're a long-lead investor you can use the options markets

[00:46:00] expectations and pricing i think that's still in a lot of great information for you as a long-lead

[00:46:04] investor like well what is our view here where where should we put uh supply and domestic

[00:46:09] excuse me support and resistance what is supply and demand you know what is the market pricing

[00:46:13] in here in terms of moves does that fit with our expectations or not i think you know there's a

[00:46:17] there's a lot of interesting you know data in that uh for adjusting allocations and different things like

[00:46:22] that um i think it's kind of a no-tap resource to be honest yeah and even if you don't do anything

[00:46:27] with it just just using it to understand what you're seeing in front of you like it to me

[00:46:31] has been really valuable like i don't I don't do anything with options but like you know i explain

[00:46:34] things that i'm seeing in the market and also like there's a lot of stuff you know in terms of just

[00:46:38] understanding probabilities and understanding all kinds of stuff you know behind the scenes that

[00:46:42] is just very useful as well even if you know you don't do anything specifically options yeah yeah and

[00:46:47] you know a lot of the dissonant you know if you don't want to buy into dealer hedging flows and

[00:46:51] stats buy that support those types of views you know you can just extract a lot of sentiment from

[00:46:56] it which i think is really uh really quite valuable and we've seen some situations in the past month

[00:47:00] with Starbucks um Uber shot you know some of these names were down 20% after earnings where the options

[00:47:07] didn't buy those lows they were kind of fading off those lows uh and that turned the proved to be

[00:47:12] short term lows in those stops so you know there's a lot of information there that again i think

[00:47:16] is valuable if you're only trading only trading equity is not trading the options so on this on this

[00:47:22] last slide home you've got the waiting room it's complicated last slide I have some

[00:47:27] of the atheor of that jp Morgan strike down here below so the key takeaway here is that look

[00:47:32] if we break 5200 which is the support strike i think we very quickly traded 5100 and then

[00:47:39] and then the risk is uh a further kind of visit to that 5000 air particularly if Nvidia's

[00:47:44] just not that great of a number um then that 5000 should be major support again like it was

[00:47:50] in the mid-April and into the upside there's two interesting levels i think after seep guy

[00:47:54] you got this 5265 which is the previous ultime hynia sp and the above budget spider call positions

[00:48:00] that that 525 spider level which lines up with 5265 so between there i think they were

[00:48:05] under way of this resistance area so i think after cpi summing that all those spying we moved

[00:48:10] up to the area and we're in the kind of 5265 to 5300 area for Nvidia earnings and if Nvidia

[00:48:16] earnings are good particularly that calls to you not really there i think that we could make a fresh

[00:48:20] leg higher fresh ultime hynia into the end of May's kind of how i'm looking at it that's the

[00:48:25] scenario that i'm really kind of banking on um people aren't really demanding much

[00:48:30] edges so we do break 5200 then i think you can enter edges you know if your bind puts or

[00:48:34] puts spreads or whatever it may be because there's a lot of room down right to 5100 uh or even

[00:48:39] 5000 depending on how the combination of cpi and Nvidia earnings goes yeah i think that's a good

[00:48:45] that's a good something to wrap up on and i know you've got you got to go somewhere um maybe

[00:48:49] someday we'll get to the point where you and i will tilt forward in our chairs and stocks

[00:48:52] will start moving 200% but uh we i don't think we have the audience yet for the uh for the

[00:48:55] outfits to back for that to happen but hopefully that's coming someday in the future.

[00:49:00] That's right uh that's those two folks so what to play that means somehow uh but yeah thank you very

[00:49:05] much for uh for i'm me on again here jack with some real pleasure do these topics uh regular

[00:49:10] opx uh affect videos because we get to check how we've done we get to frame everything from a

[00:49:14] little bit of a longer perspective along that we can we can wrap up but it's good for me too

[00:49:18] because it just helps me understand what's going on behind the scenes and hopefully you know even

[00:49:21] for longer term investors who aren't involved in options hopefully this helps to explain you know

[00:49:25] what you're seeing a lot because we know options activities increase a lot we know it's playing

[00:49:29] a bigger role in the market and i think it's important for all of us to understand it.

[00:49:32] Absolutely the the volumes keep increasing um and so you know those dealer hedging flows increase

[00:49:37] are in that and then obviously there's a lot of information from a sentiment perspective we uh

[00:49:41] pulled from that so uh thank you again for for setting this up and uh we look forward to talking

[00:49:46] you again next month we'll see everyone again next month.

[00:49:49] This is Justin again. Thanks so much for tuning into this episode if you found this discussion

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[00:49:59] comment we appreciate. The opinions expressed in this podcast do not necessarily reflect the opinions

[00:50:04] of a litia capital no information on this podcast should be construed as investment advice

[00:50:08] security's discussed in the podcast maybe holdings of clients of litia capital