In this episode of Excess Returns, Jack Forehand and Brent Kochuba from SpotGamma break down the forces at play beneath the surface of the market as we head into the May 2025 options expiration (OPEX). While the S&P 500 has rallied hard, a deeper look at positioning, liquidity, volatility, and sentiment reveals a market on a potentially fragile footing. From the continued explosion of zero DTE options to concerning signs from liquidity metrics, this discussion explores how short-term positioning could dictate major moves—and why the post-OPEX landscape may not be as stable as it appears. Plus, yes… we finally explain the "Saul Goodman" reference.

🔑 Topics Covered:

Why May’s OPEX setup is lopsided with call exposure—and why that’s dangerous

The eerie lack of downside hedging despite a big market rally

How zero DTE options and mean reversion flows are masking real volatility

The dangerous illusion of low realized vol vs. wide intraday ranges

Why poor liquidity is a potential precursor for the next volatility event

Analysis of SPX vs. SPY positioning—and which one signals more risk

The “Saul Goodman” signal: What it means and why it might be a contrarian tell

What the data says about a potential flip post-OPEX

June expiration on deck: Could it be the next volatility catalyst?

In this episode of The OPEX Effect, Jack and Brent dive deep into the market turmoil following "Liberation Day" and the implementation of new tariffs. With volatility spiking to levels not seen since the 2020 COVID crash, the hosts analyze how options markets are reacting, why liquidity has evaporated, and what investors should expect in this new higher-volatility regime. The conversation covers everything from VIX behavior to options positioning, and provides critical insights for navigating these turbulent markets.

Key Topics Covered:

The recent market volatility spike and why this represents a fundamental "regime change"

How options market makers are reacting to the tariff announcements and subsequent 90-day pause

Why liquidity has disappeared from markets and its impact on price movements

The significance of this month's options expiration and VIX expiration

Why zero-DTE options are NOT the cause of recent volatilityTechnical support and resistance levels based on options positioning

Gold's recent surge and signs it may be ready for consolidation

The impact of increased correlation across asset classesExpectations for upcoming earnings season and its importance in this environment

In the latest episode of the OPEX Effect, Jack Forehand and Brent Kochuba take a look behind the scenes of the big market selloff and the options flows driving it. They break down the massive options expiration coming up (the second-largest ever) and its potential impact on market movements.Key topics covered:Understanding the current high-volatility environment and why options volumes are driving increased market swingsAnalysis of the JPMorgan collar trade at the crucial 5565 level and its market implicationsDeep dive into the mysterious "Captain Condor" trader and their impact on market dynamicsDiscussion of multiple major events ahead: VIX expiration, FOMC meeting, quarterly OPEX, and potential tariff deadlineExamination of fixed-strike volatility and why traditional VIX readings might be misleading in the current environment

In this episode, Jack Forehand and Brent Kochuba analyze the current state of the options market heading into the February 2024 options expiration. They explore several critical themes, including:Why volatility remains surprisingly low despite significant market-moving eventsThe unusual dynamic where large single-stock moves (like NVIDIA's historic drop) aren't translating into broader market volatilityThe concerning signs in correlation metrics that echo patterns from past market stress periodsThe critical role of NVIDIA's upcoming earnings as a potential catalystWhy the current environment shows signs of stretched positioning that could lead to future volatilityThe shifting dynamics in Tesla options and the broader implications for market sentimentBrent shares his unique insights on why we're seeing an environment where traders are responding to market drops by selling calls rather than buying puts, and what this means for market stability. He also breaks down why the upcoming NVIDIA earnings report on February 26th could be a pivotal event for market direction.Whether you're an options trader or just interested in understanding market dynamics, this discussion provides valuable insights into the forces currently shaping market behavior.

Join Brent Kochuba and Jack Forehand as they analyze the current market landscape and what options flows tell us about potential volatility ahead. The duo dives deep into why the market may be underpricing volatility risk despite a recent 5% drawdown, significant upcoming events, and shifting rate dynamics. Key topics covered: Why the current options market positioning suggests heightened volatility risk Analysis of January options expiration and its potential market impact Deep dive into Tesla vs NVIDIA options positioning and what it means for both stocks The evolution of zero DTE options trading and its real market impact How dealer gamma positioning could amplify market moves Breaking down the correlation between different asset classes in the current environment Whether you're an options trader, long-term investor, or market enthusiast, this episode provides valuable insights into the mechanics driving today's markets and what might lie ahead. Don't miss this detailed discussion of market structure, options flows, and potential catalysts that could drive significant moves in early 2025.

Join Brent Kochuba and Jack Forehand as they break down December's historic options expiration - the largest OpEx on record. In this deep-dive episode, they explore: Why this December OpEx is uniquely significant with over $1.9 trillion in options value expiring Tesla's remarkable 75% surge since November and what the options market signals about its sustainability The fascinating case of MicroStrategy, Bitcoin enthusiasm, and concerning signs of market euphoria How major market positioning could impact year-end trading Why extremely low volatility and deteriorating market breadth may be warning signs The stark divide between mega-cap tech performance and the broader market 00:00 - Welcome to The OpEx Effect - Biggest Options Expiration Ever 00:35 - Why This OpEx Is Different: Record Volumes & Significance 02:06 - Understanding Options Market Growth & Impact 05:07 - Breaking Down the $1.9 Trillion in Options Value 08:42 - Call vs Put Dominance (10:1 Ratio) 15:07 - Record Low Volatility & Market Implications 19:15 - Tesla's 75% Surge Since November 23:30 - MicroStrategy, Bitcoin & Market Sentiment 28:45 - Market Breadth Issues & Mega-Cap Divergence 35:14 - The "Balloon Pop" Theory of Volatility 42:17 - JP Morgan Collar & Market Pinning Effects 47:16 - Cost of Portfolio Hedging at Historic Lows 50:47 - Warning Signs: Margin Debt & Retail Speculation 54:27 - The Problem with MicroStrategy's Premium 58:31 - Market Divergence: "Crocodile Jaws" 1:01:47 - Final Thoughts & Looking Ahead to January 1:04:49 - Closing Remarks & Disclaimer DOWNLOAD THE SLIDE DECK https://spotgamma.com/opex MORE INFORMATION ABOUT SPOTGAMMA ⁠https://www.spotgamma.com⁠ ⁠⁠⁠⁠⁠FOLLOW BRENT ON TWITTER ⁠⁠⁠https://twitter.com/spotgamma⁠ ⁠⁠⁠⁠FOLLOW JACK ON TWITTER ⁠⁠https://twitter.com/practicalquant⁠

In this episode of The OpEx Effect, we dive deep into the fascinating market dynamics following the recent election and explore the remarkable surge in options trading volume. We break down how Tesla's impressive rally is being driven by options flows and explain the mechanics behind gamma squeezes. We explore several key themes, including: How the post-election volatility crush led to a significant market rally Why Tesla has become the premier "Trump trade" and what the options flows tell us about its momentum The current state of meme stocks and the return of familiar faces like Cathie Wood Why the upcoming NVIDIA earnings could be a major catalyst for the broader market What dealer positioning and options skew tell us about potential year-end moves Throughout our discussion, we emphasize our core thesis that "flows over fundamentals" is increasingly driving market action, especially as options trading volume continues to hit new records. We also touch on our outlook for the crucial December OpEx period and share our thoughts on why the current rally may have more room to run despite stretched valuations in certain names. Join us for an in-depth conversation that combines technical analysis, market structure insights, and practical implications for long-term investors.

DOWNLOAD THE SLIDE DECK https://spotgamma.com/opex MORE INFORMATION ABOUT SPOTGAMMA ⁠https://www.spotgamma.com⁠

In this episode of the OPEX Effect, we take a look behind the scenes at options flows at what is going on in the options market as we head into the election. We cover: - The current options landscape leading into October expiration - How NVIDIA's performance continues to drive broader market trends - Analysis of volatility patterns and their implications for market movement - Detailed exploration of potential market reactions to the upcoming U.S. election - The mechanics behind post-election volatility crush and its effect on stock prices - Comparisons to previous election cycles and lessons learned - Discussion of the JP Morgan collar trade and its market influence - Insights on interpreting options flow data to anticipate market moves Whether you're an options trader, long-term investor, or simply interested in understanding market forces, this episode provides valuable perspectives on how options expiration and major events like elections can shape market behavior. Brent and Jack break down complex concepts into digestible insights, offering both technical analysis and practical takeaways for navigating the current market environment.

SPOTGAMMA'S NEW PRODUCT - TRACE THE MARKET https://spotgamma.com/trace-the-market-excess-returns/?aff=Excess DOWNLOAD THE SLIDE DECK https://spotgamma.com/opex MORE INFORMATION ABOUT SPOTGAMMA ⁠https://www.spotgamma.com⁠ ⁠⁠⁠⁠⁠FOLLOW BRENT ON TWITTER ⁠⁠⁠https://twitter.com/spotgamma⁠ ⁠⁠⁠⁠FOLLOW JACK ON TWITTER ⁠⁠https://twitter.com/practicalquant⁠