Episode summary
We Asked an Options Expert Why This Melt Up Hasn’t Broken — and Which Signal Could End It
Excess Returns
· · Hosts: Jack Forehand · Guests: Brent Kochuba
Summary
Brent Kochuba argues that the S&P 500’s recent melt-up has been reinforced by unusually call-heavy options positioning, strong AI and semiconductor earnings, and a market that has repeatedly looked through oil shocks and geopolitical risk. He says the S&P is now in a very transient positioning regime: short-dated options have created support near current levels, but that support can disappear quickly when contracts expire.
He also says the setup into the next OPEX window is different from what the market saw in April. The current expiration is still very large, especially in single names, but the more important change is that volatility should be squeezed into expiration and then have room to expand afterward. Brent highlights May 19 to May 20, VIX expiration, and NVIDIA earnings as the key dates that could finally produce some consolidation or a volatility shift.
Across the broader market, Brent says dealer gamma is still heavily concentrated in mega-cap tech and AI names like NVIDIA, Tesla, Apple, and Amazon, where call selling and yield-seeking behavior help suppress day-to-day movement. He expects short-term price action to become less supportive after expiration, but he does not frame that as a crash call; he sees it more as a pause, reset, and potential setup for the next leg if earnings remain strong.
Key takeaways
- Brent says the S&P 500 is in “about as call heavy as it gets,” but much of that reflects a huge rally rather than just fresh speculative buying.
- Brent expects volatility to contract into May OPEX and then expand afterward, with May 19 to May 20, VIX expiration, and NVIDIA earnings as the critical window.
- Brent says the market has largely ignored oil and geopolitical shocks because AI and capex-driven earnings have dominated price action.
- Brent says dealer gamma in large-cap tech is still supportive, helping explain why stocks like NVIDIA, Apple, Amazon, and Tesla can absorb strong earnings without huge immediate reversals.
- Brent thinks the next move is more likely to be consolidation or a mild correction than a major drawdown, unless a major new catalyst hits.
Notable quotes
“It was the biggest uh call volume day ever for the S&P measured in in notional value”
“This is about as call heavy as it gets”
“what happens now in the S&P is that the positioning in the S&P is very transient”
“I really think that implied V is going to contract pretty sharply now over the next week”
“the big thing is expect contraction over the next 10 days in and market prices and then an expansion”
How the episode opens
It was the biggest uh call volume day ever for the S&P measured in in notional value. And so, you know, you look at the convexity of this and it speaks to the growth in options over time. This is about as call heavy as it gets.
And and that shouldn't be surprising to anybody. If you're not in these names, you have to chase these names, right? And so, there's a lot of kind of force buying into the space as those names gain in size.
You know, you need that exposure. We go from positive on this axis to negative on this axis. If you remove today's positions, so what happens now in the S&P is that the positioning in the S&P is very transient.
It's here today and it's gone tomorrow. When you go farther out in time, they have this negative gamma position. What does that mean?
The market is more free to move about. And so this is what we're seeing, right? This is what happens in sort of peak bulls, uh, is the way that I would frame this.
So, we went from incredibly bearish positioning to very bullish positioning.
So, Brent, can we can we say we're in meltup mode now? I mean, we I I feel like we almost can. — I mean, if you look at the biblical returns over the last uh month since we last talked, it's been been just amazing. So, I think full meltup uh capex spasms, whatever you want to call this, uh it's really been it's been something else, right?
Yeah. Yeah. And I like I like your title capex greater than crude because that that is kind of the deal here, right? Is is like the market's sort of looking through whatever's going on in the short term and saying like we've got this huge thing coming in the future.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- options positioning
- zero dte options
- opex volatility shift
- ai capex and semiconductors
- spx call volume
Companies and tickers mentioned
- NVDA
- TSLA
- AAPL
- AMZN
- SpotGamma
- Nvidia
- Tesla
- Apple
- Amazon
- SpaceX
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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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