Stocks Are Falling. Put Buying Hit a Record. So Why Does an Options Trader See a Thanksgiving Rally?

Brent Kochuba argues that the current selloff is being driven as much by options hedging and dealer positioning as by headlines, with record put demand, negative gamma, and a flattening VIX term structure amplifying daily swings. He says the market has been unstable since the October options expiration, and that the heavy put position into November expiration can still pressure stocks even though this is not a large monthly expiration.

He ties the weakness in AI and semis to a mix of falling call demand, rising correlation, and higher bond yields that have disrupted the rotation trade out of tech and into other sectors. Brent says the rally/bounce case depends on the market getting through a cluster of events next week, including Nvidia earnings, the Anthropic IPO, VIX expiration, and November OPEX.

His base case is near-term downside risk, but he also sees the setup for a Thanksgiving rally once those risks begin to clear. Brent wants to see the weakest AI infrastructure names stabilize before trusting a durable recovery, and he stresses that options prices are already elevated, so traders are paying up for protection while the market remains in a choppy, two-way regime.