ABOUT THIS EPISODE
Brent Kochuba of SpotGamma is back for The OPEX Effect to explain why July options expiration could remove a major source of market support and open the door to a volatility spike or stock market correction. We examine positive gamma, ultra-low S&P 500 implied volatility, near-record-low correlation, extreme Nasdaq volatility, AI stock dispersion and why the current setup resembles July 2024 before a 10% drawdown.
Brent Kochuba on X
https://x.com/spotgamma
SpotGamma
https://spotgamma.com
Main topics covered
Why markets have become numb to geopolitical risk, war headlines and oil volatility
How market-maker hedging, positive gamma and systematic options selling stabilize stocks
Why OPEX and VIX expiration can create a window of weakness or a window of strength
How ETF growth, leveraged products and new listings create additional options exposure
Why July OPEX is small for the S&P 500 but meaningful for AI and semiconductor stocks
What happened to SpaceX volatility after traders sold expensive calls and puts
Why expensive implied volatility can make put options lose money even when a stock falls
What extreme COR1M and dispersion reveal about the divide beneath the market averages
Why S&P 500 volatility is priced for perfection while Nasdaq volatility resembles a meme stock
Why the VXN-VIX spread and July 2024 analog have Brent preparing for a potential correction
Timestamps
00:00 Why markets are ignoring geopolitical risk
05:16 How systematic options flows stabilize stocks
09:33 Gamma squeezes and why OPEX can reset market trends
13:37 Positive gamma and suppressed daily volatility
17:41 How new listings and ETFs feed into options markets
21:48 Why July OPEX is concentrated in single stocks
25:48 Reviewing June guardrails and the AI stock correction
30:39 July gamma support and the post-OPEX window of weakness
38:34 Near-record-low correlation and a fragile market setup
44:20 S&P 500 volatility is priced for perfection
48:31 Why options are serially underpricing volatility
52:31 How AI could reshape the Nasdaq and its volatility
57:54 Why July 2024 may be the key OPEX analog
01:02:02 Brent's market risk outlook and hedging plan
Learn more about the Excess Returns podcast network: https://excessreturns.co
No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
