Episode summary
Bullish Options Trades Slow amid AI Uncertainty
The Markets
· · Guests: Lee Coppersmith
Summary
Lee Coppersmith said the market took the latest Fed meeting in stride, with the S&P options market pricing a 60 to 65 basis point move and equities digesting the press conference better than they had earlier in the year. He said the committee sounded balanced but slightly cautious, and that the market seemed more focused on earnings than on the policy decision itself.
The bigger story, he argued, is the AI trade. AI demand remains “incredibly strong,” but competition is intensifying, dispersion is rising, and investors are focusing more on financing and on which companies will emerge as winners and losers. He said credit weakness has been concentrated in names with heavier AI exposure, while issuance in 2026 is running about three times 2025 levels, creating a supply-over-demand problem that is widening spreads.
Coppersmith also said retail participation has cooled, with volumes down roughly 20% from late June, and that the recent options tone has shifted from call buying toward more put buying. Even so, he thinks option pricing is now fair on both sides and that the richer catalyst calendar makes it a reasonable time to use options tactically. His preferred area outside AI is biotech, which he sees as supported by lower rates, more M&A, and possible spillover from AI-driven drug discovery.
Key takeaways
- Lee Coppersmith said the S&P options market was pricing a 60 to 65 basis point Fed move, and the equity market handled the press conference better than in recent meetings.
- He said AI demand is still “incredibly strong,” but investors are focusing more on financing needs and identifying winners and losers as competition increases.
- Coppersmith said retail options activity is down roughly 20% from late June, and call buying has cooled across both retail and institutional clients.
- He said put buying has picked up in recent weeks, signaling more nervousness into year-end even as implied volatility is not especially high.
- His preferred trade outside AI is biotech, which he sees benefiting from lower rates, more M&A, and possible AI-driven drug discovery tailwinds.
Notable quotes
“the S&P options market was implying somewhere between a 60 and 65 basis point move”
“The main takeaway for us is that AI demand remains incredibly strong, but the competition has become more fierce”
“the amount of issuance so far in 2026, it's about three times higher than it was in 2025”
“put buying has picked up, which tells us there's a lot more nervousness around just how things will play out between now through year-end”
“We like biotech here”
How the episode opens
This is The Markets. I'm Chris Hussey, and today is Thursday, October 29th, and I'm here on the Goldman Sachs trading floor with Lee Coppersmith, who is on our hedge fund derivative sales desk within FICC and Equities. And we're going to be talking about everything that's current right now, the Fed, earnings, AI, the retail investors, vol, the whole shebang.
Lee, thanks so much for joining us. Chris, thanks for having me. Okay, Lee, let's start with the Fed, one of the big pieces of news that came out this week.
What did we learn? What was the market's reaction? So stepping back, I think when you look at the setup heading into the Fed, the S&P options market was implying somewhere between a 60 and 65 basis point move.
That's a bit lower than we've seen going into the previous FOMC meetings, somewhere around, call it 75 basis points. So I think the focus on the Fed was actually kind of like secondhand relative to the earnings that we're kind of digesting around it. Mainly, I think this is because you weren't really expecting a decision from them yesterday.
So overall, I think Warsh and the committee struck this balanced tone, but there was a little bit of apprehension, I think, in the way they conveyed their message, particularly around the correlation between interest rates and the AI story, which I think kind of suggested they are happy to go at a slower pace. The equity markets actually digested this all very well. This was the first time in seven meetings that the S&P actually finished up on the day after an FOMC press conference.
So I think all things considered, it was a sigh of relief after we've seen multiple press conferences in a row inject some kind of volatility into the equity space.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai uncertainty
- options put buying
- big tech earnings
- ai stock demand
- s&p resilience
Companies and tickers mentioned
- GS
- Goldman Sachs
Watch the episode
Watch “Bullish Options Trades Slow amid AI Uncertainty” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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