Episode summary
The Market the Tweets Can’t Break | What the Options Market Tells Us About What Comes Next
Excess Returns
· · 1 hr 9 min · Hosts: Jack Forehand · Guests: Brent Kochuba
Summary
The episode argues that the market’s resilience through war headlines, oil spikes, and nonstop political noise is being shaped less by the news itself than by options positioning and dealer hedging. Brent Kochuba says the market has stayed near highs because a lot of participants were already hedged, while the options complex has become large enough to reinforce short-term price ranges and amplify reversals when positioning clears.
Kochuba focuses on how call selling, gamma, and expiration mechanics are creating a ceiling around the S&P 500 near 6,800. He says the April options expiration is not a huge macro event on its own, but it matters because hedges tied to prior positions are fading and because call supply in the market is building resistance. He also argues that the VIX collapse was driven by reflexive flows: as volatility fell, hedgers bought stock, which pushed volatility down further.
He expects a period of consolidation after April OpEx, with earnings and future geopolitical headlines deciding whether the market can extend higher. The key message is that the options market is signaling less panic than the news flow suggests, but also less immediate upside than a simple “risk-on” reading would imply.
Key takeaways
- Brent Kochuba says call options are cheap and the options market is not pricing in much upside as earnings approach.
- He argues that call selling around 6,800 is creating resistance in the S&P 500 and could cap the rally near term.
- Kochuba says the VIX collapse was amplified by reflexive hedging flows, not just by a calmer geopolitical outlook.
- He expects the market to consolidate after April options expiration unless earnings or a major headline changes the setup.
- He says the S&P options complex is now so large that dealer hedging can materially move the underlying market.
Notable quotes
“call options are very cheap right now. So we can say that and that is a that is a fact”
“no one in the option space is pricing in much of an upside move uh for like the mag sevens for example”
“If the market rallies into opex, it tends to sell off after opex and vice versa”
“when the market rallies 3% you get VS dropping so fast it makes people have to buy more stock”
How the episode opens
Only one time ever did we have a bigger drop from VIX 25 down and that was in 2007 in the GFC. Looking forward here in into where we are. This oil equity vault correlation seems to have at least for the time being snapped.
A lot of this is just reciprocal or reflexive in nature, right? it and and because the flows I think now are so automated and and people are aware of volatility as a as an asset class um and and the options markets getting to be bigger that when the market rallies 3% you get VS dropping so fast it makes people have to buy more stock it's a balance of risk again I don't want to buy that but I don't want to be sitting there selling this V anymore right because that's so cheap it's What? Even if you're right, what are you making?
Basically nothing. Everything is on the put side of the fence, right? We're all concentrated on leftist.
Everyone's in puts and all these names. So Bren, I feel like we're kind of where we were last time in a lot of ways. I mean, the we've still got the oil shock.
The war is, I guess, questionable. What's going on with that? Um, this market's still not down that much.
And the rural the world is still ruled tweet by tweet or truth by truth or whatever we're calling them these days. I mean, it seems like we're saying the same thing we said at the beginning of the last one.
Yeah, it's been, I guess, an exhausting month. You and I were talking about like how like AI basically just has uh ruined our lives cuz all we do is like try to make stuff now. Uh so there's that there's that which remember software stocks crashing because of OpenClaw was just our March episode that seems like years ago.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- options flows
- gamma positioning
- vix collapse
- zero-dte options
- opex market turning points
Companies and tickers mentioned
- SpotGamma
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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