In this episode, Brent Kochuba of SpotGamma joins Jack Forehand to break down the October options expiration and the surge in volatility that hit markets. They discuss record-breaking options volumes, the impact of zero-DTE trading, Trump’s market-moving tweet, and why the options market is increasingly driving short-term price action. Brent explains how positioning, gamma dynamics, and liquidity flows combine to create instability — and what that might mean for volatility into year-end.

Topics covered:
• Record 110 million options contracts traded and what it means for market structure
• Why volatility spiked even though the S&P 500 barely fell
• The role of dealer positioning and negative gamma in amplifying market swings
• How the AI trade and single-stock call buying distorted implied volatility
• The growing dominance of zero-DTE options and their destabilizing effects
• What OPEX and VIX expirations tell us about volatility mean reversion
• ETF leverage, financialization, and systemic risk
• The relationship between correlation, dispersion trades, and crowding in AI names
• Why volatility events now resemble “spasms” instead of slow corrections
• How these options dynamics could influence the year-end “Santa Claus rally”

Timestamps:
00:00 Record options volume and volatility spike
04:00 The AI call-buying frenzy and how it unwound
10:00 Understanding dealer gamma and hedging flows
12:00 OPEX, VIX expiration, and mean reversion in vol
16:00 Event calendar and upcoming catalysts
18:00 October OPEX setup and neutral call/put balance
21:00 Seasonal trends and the “Santa Claus rally”
27:00 Revisiting September’s predictions and what played out
33:00 Market concentration and AI narrative
40:00 Dispersion trades, correlation, and crowding
44:00 Zero-DTE dynamics and their systemic impact
50:00 Volatility spikes, leverage, and what comes next

In this month’s OPEX Effect, Brent and Jack break down the September OPEX, which may be the largest ever. With volatility deeply suppressed, a record call skew, and the Fed meeting coinciding with VIX expiration, markets are set up for potential fireworks. The conversation explores how derivatives flows shape equities, why this expiration could be a turning point, and what investors should watch around key levels like 6,500.

Topics Covered

• Record zero DTE volumes and their market impact

• Why September OPEX may be the largest expiration ever

• The “vol pop zombie hunter” theme and what it signals

• How option dealer hedging drives equity flows

• The correlation between gamma positioning and volatility

• Macro dynamics: rate cuts, liquidity, and potential bubble parallels

• Why call skew is extreme but call prices remain low

• How suppressed implied vol sets up risk of a volatility spike

• The VIX futures curve, ETF flows, and market dislocations

• Key levels to watch: 6,500 and beyond for downside risk

Timestamps
00:00 – Zero DTE dominance and setup into September OPEX
02:00 – “Vol Pop Zombie Hunter” theme explained
06:00 – How options flows translate into equity moves
11:00 – Options expiration cycles and turning points
16:00 – Largest expirations and potential market reversals
20:00 – Extreme call skew and positioning risks
28:00 – Sector positioning and the lack of call demand
33:00 – Correlation lows and implications for market breadth
37:00 – Realized and implied volatility at historic lows
43:00 – VIX futures curve, ETFs, and contango dynamics
50:00 – Risks below 6,500 and the role of JP Morgan’s collar
53:00 – The destabilizing effect of disappearing zero DTE flows

In this episode of The OPEX Effect, Jack and Brent dive deep into the current market dynamics, exploring what they call the "Honey Badger" and "Zombie" market phenomena. With options volumes hitting record highs and realized volatility at basement levels, they analyze whether we're heading into a 2017-style low-volatility grind or if a volatility spike is imminent. The discussion covers everything from the latest options positioning data to the impact of zero-DTE trading on market behavior, providing valuable insights for both short-term traders and long-term investors.

• Market Rally Analysis - Comparing the current 4-month rally (25%) to post-COVID gains and why it feels more orderly than expected
• The "Honey Badger" Market - How the market has been buying every dip regardless of negative headlines like tariffs and policy uncertainty
• Options Volume Records - Breaking down the explosive growth in options trading and its impact on underlying stock flows
• Realized Volatility at Extremes - Why hitting 6% realized vol signals potential for major volatility expansion ahead
• The "Zombie" Market Theory - Drawing parallels to 2017's low-volatility environment and what it means for positioning
• Options Positioning Data - Current expiration analysis showing surprisingly average positioning despite market highs
• Tech Calls Opportunity - Why tech sector calls are at their cheapest relative levels in nearly a year
• Market Maker Hedging Flows - How dealer gamma positioning creates "strait jacket" effects on market movement
• Jackson Hole & Rate Cut Expectations - Upcoming catalysts and why the market is pricing in 91% chance of rate cuts
• New Tool Launch - Introduction of Flow Patrol, a daily PDF report tracking proprietary buy-side positioning data

• 00:00 - Introduction and market rally discussion
• 01:18 - Honey Badger market concept explanation
• 05:05 - Options volume impact on equity markets
• 10:05 - Hedging flows and market dynamics
• 12:00 - Historical options expiration patterns
• 16:00 - Positive gamma and "Chinese finger trap" markets
• 18:00 - Current expiration positioning analysis
• 24:00 - July predictions review and honey badger emergence
• 33:00 - The zombie market theory and realized volatility extremes
• 43:00 - Friday market action and volatility pricing analysis
• 47:00 - The "spasm" effect and correlation dynamics
• 52:00 - Forward-looking events and zombie market continuation
• 57:00 - Investment recommendations: puts and tech calls
• 59:00 - Bubble detection through options pricing
• 1:04:00 - Flow Patrol tool announcement and wrap-up