The Rally No One Trusts | What the Options Market Tells Us About What Comes Next

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?