Magnet Above. Trap Door Below | Inside the Options Flows Driving Markets with Brent Kochuba

Summary

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Excess Returns Podcast Summary

Episode Title: Magnet Above. Trap Door Below | Inside the Options Flows Driving Markets with Brent Kochuba
Podcast: Excess Returns
Date: December 13, 2025
Guests: Jack Forehand, Brent Kochuba (Spot Gamma)
Main Theme:
A deep dive into how options flows—particularly around key expirations—are influencing market dynamics, sector rotation, implied volatility, and “Santa Rally” expectations. Brent Kochuba breaks down options data, dealer positioning, and the importance of monitoring expiration-related flows even for long-term investors.

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Overview of the Episode

This episode centers on the explosive growth and dominating influence of options market flows—especially zero day-to-expiration (0DTE) options—and how these flows influence equity market direction, volatility suppression, and sector rotations. Brent Kochuba, founder of Spot Gamma, shares actionable insights into reading options data, the impact of large expirations (especially the December OPEX), and practical implications for both hedgers and speculators across stocks, indexes, and even commodities like silver.

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1. Key Discussion Points & Insights

A. The Ever-Growing Impact of Options Flows

• Options Market Growth: Since 2020, options volumes are up 150%+, outpacing stock volume. The bulk of this growth is driven by both institutions and retail participation, especially in 0DTE options.
• 0DTE Dominance: In November, the CBOE reported a record ADV of 4.6 million SPX contracts—2.8 million of which were 0DTE—highlighting the central role of short-dated options.
• Market Making & Transmission: Market makers facilitate ~90% of trades. When traders buy large volumes of calls/puts, market makers are forced to hedge by buying/selling underlying shares, causing significant spot moves. (09:56)

“If you’re trading the S&P 500, you’ve got to be watching those 0DTE flows... we see fingerprints of those trades in the market every single day now.”
— Brent Kochuba (10:18)

B. Current Macro Backdrop and AI Speculation

• AI: Bubble or Paradigm Shift? The panel discusses the blurring line between hype-driven investment (like during the Internet bubble) and the real utility of current AI advancements.

“It’s hard to realize that it can be a successful product... but the billions and trillions of dollars flowing into it might still be too much.” (03:57)
— Brent Kochuba

• Sector Rotation: Tech and AI mega-caps’ momentum is waning. Money is rotating into small caps and value stocks, but not in a classic “risk-off” scenario.
• December’s Build-Up: December’s options expiration is always the largest of the year, making these flows even more critical.

C. Santa Claus Rally & Flows Narrative

• Seasonal Dynamics: The so-called “Santa Rally” isn’t magic—flows into/through large expiries, especially with bullish call-heavy positioning, tend to support markets in December.
• Market Structure: Current positioning is call-weighted but not at extreme levels; likely a mild tailwind, not a blowout.

“This flow should help keep the market propelled into this options expiration next week. And then volatility sort of subsides. And then... maybe that allows January to be a little bit more volatile.”
— Brent Kochuba (17:01)

D. Dealer Positioning, Gamma, and Key Levels

• Delta & Gamma Explained: Dealer hedging flows depend on delta (stock exposure equivalent) and gamma (rate of change of delta), which peak around large strikes approaching expiration.
• “7,000 Magnet” and “6,800 Trap Door”:
  • 7,000 Level: Represents a “magnet” for the S&P due to open interest, especially related to the large JP Morgan collar trade.
  • 6,800 Level: Below here, negative gamma risks, higher volatility, and greater probability of a larger selloff.

“As long as we’re over that 6,800 level, I like leaning long. If we lose 6,800, then show’s over—I think we trade down to 6,600.”
— Brent Kochuba (59:21)

E. Volatility Suppression & Retail Strategies

• Iron Condor Popularity: Retail traders often sell iron condors in 0DTE options, betting on limited market movement.
• Martingale Risk: The doubling-down “martingale” method can blow up when volatility spikes persist longer than expected.

“If you keep doubling down, the exponential values... at some point you could have a capital constraint that blows that trader up.” (10:18)
— Brent Kochuba

• Volatility “Crush” and Cheap Upside: Options are particularly cheap heading into December due to both holiday effects and dealer positioning (especially calls near JP Morgan’s 7,000 strike), making tactical upside exposure attractive.

F. Recent & Upcoming Market Events

• Post-November OPEX: Market bottomed on OPEX day, then rallied amid volatility “clearing.”
• Oracle and Tech Earnings: Oracle’s surprising influence—a major AI CapEx play. Even with a 14% post-earnings drop, put implied volatility fell, meaning traders sold (not bought) puts, possibly signaling greater confidence in downside containment (53:56).
• Fed, CPI, and Non-Farm Payrolls: While major events, the market is focused on positioning through the end of December into January, with a likelihood for increased volatility as traders return from holidays.

G. Silver and Commodities Option Flows

• Silver's Run: Silver rallied sharply (up ~30% since early December), attracting speculation that banks like JP Morgan are “on the ropes”—a meme reminiscent of past commodity squeezes.
• Options Data Signals: As silver made new highs, call volumes (implied volatility) peaked and began falling. This typically signals exhaustion and possibly a short-term pause/correction.
• Historical Lessons: Attempts at “cornering” markets (e.g., the Hunt Brothers in silver, or the nickel squeeze) demonstrate that exchanges will change rules to protect market integrity, making giant “break the bank” trades dangerous.

“If JP Morgan was indeed on the ropes, they will change the rules of the game... the system protects itself.”
— Brent Kochuba (63:50)

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2. Notable Quotes & Memorable Moments (with Timestamps)

• “Price is truth. The options market is going to tell us what people are actually betting with their money versus you and me, you know, spewing ridiculousness about AI that we don’t know anything about.”
  — Jack (06:21)

• “So if you keep doubling down, the exponential values of this thing... at some point you could have a capital constraint that blows that trader up.”
  — Brent Kochuba (10:18)

• “Gamma concentrates for at-the-money options and increases as we get closer to expiration. Just replace ‘gamma’ with ‘hedging importance.’”
  — Brent Kochuba (45:45)

• “Options volumes continue to grow, as you can see here from 2020 to the present, up 150%... That’s greatly outpacing stock volume, and I think a lot of that stock volume is driven by options hedging flows.”
  — Brent Kochuba (07:31)

• “If you trade the S&P 500, you’ve got to be watching those 0DTE flows.”
  — Brent Kochuba (10:18)

• “Buying a cheap option: if you’re wrong, fine, I lost my money on a cheap option. It’s great.”
  — Brent Kochuba (48:17)

• “No one at the moment seems to be wanting to buy Oracle puts, which to me suggests that Oracle is not about to go belly up, which... suggests that equities still should have a bit of support.”
  — Brent Kochuba (56:44)

• “If we lose 6,800, then show’s over. I think we trade down to 6,600.”
  — Brent Kochuba (59:21)

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3. Timestamps for Important Segments

• Options Market Growth & 0DTE Discussion: 07:31 – 10:18
• Iron Condor & Retail Strategies: 09:56 – 10:18
• AI Speculation & Sector Rotation: 03:57 – 07:14
• Santa Rally, OPEX Flows, and Market Structure: 14:57 – 19:59
• Key Levels Overview (7,000 and 6,800): 38:41 – 41:14, 59:21
• JP Morgan Collar, Gamma as Magnet: 43:12 – 46:41
• Oracle Earnings and Put Skew Discussion: 52:17 – 56:44
• Silver Options, Extreme Moves & Historical Lessons: 59:21 – 68:10
• Summary of Positioning & Wrap-up: 69:45 – End

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4. Episode Takeaways

• Options flows, especially short-dated and expiry-driven, have become the single most important source of stock market pricing pressure—affecting all investors.
• Dealer positioning and large options expirations create “magnets” (e.g., 7,000 on the S&P) and “trap doors” (e.g., 6,800 support) that traders must monitor.
• Volatility suppression from systematic call selling, income ETFs, and retail condor strategies can make markets appear calmer than they are—until positioning flips.
• Extreme options pricing in assets (stocks or commodities) often signals exhaustion; the options market provides early warnings not obvious in price charts alone.
• Regulators and exchanges have a history of changing the rules if “cornering” attempts threaten system stability—market structure trumps individual bets.

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The episode masterfully blends informed options analysis with market color, macro observations, and a peek behind the curtain at the flows driving equities and select commodities. Whether you’re a long-term investor or a tactical trader, the key message is clear: options flows not only reflect, but often dictate, the rhythm and inflection points of major markets.

Transcript

[Brent Kachuba]

Hey, what's up y'? All? Kelly Clarkson with Wayfair My favorite thing about the holidays? Decking out my whole house. It's not a competition, but if it was, well, I'd win the season with Wayfair Outdoor Inflatable Santa Got it on Wayfair Trees, lights and ornaments. Wayfair Hosting must haves like dining sets, beds, sheets and towels.

[Jack]

Wayfair for everything in your style delivered.

[Brent Kachuba]

With fast and free shipping, visit Wayfair.com or the Wayfair app to win the season. But again, it's not a competition. Wayfair Every style, every home experience A.

[Jack]

Membership that backs what you're building with American Express Business Platinum Enjoy complimentary access to the American Express Global Lounge Collection and a welcome offer of 200,000 points after you spend $20,000 on purchases on the card within your first three months of membership. American Express Business Platinum there's nothing like it. Terms apply. Learn [e-mail] Business Platinum the use of options by investors has risen dramatically since 2020. Although many long term investors like us may not use options, we are still impacted by the flows they create in markets.

[Brent Kachuba]

Many of the moves in the market.

[Jack]

Or individual stocks that we see on a day to day basis are often.

[Brent Kachuba]

Driven by flows related to options. To better understand these flows and how they impact all of us, we started.

[Jack]

A monthly podcast, the OPEX Effect with our good friend Brent Kachuba, the founder of Spot Gamma.

[Brent Kachuba]

We have included our most recent episode in the Excess Returns feed.

[Jack]

If you want to keep receiving new episodes, you can subscribe to the OPEX Effect on all major podcast platforms or our YouTube channel using the links in this episode. Description thank you for listening.

[Brent Kachuba]

We hope you enjoy the show. There's price and there's time and I think those two things are very important in considering trading because two things can be true. AI and the whole thing could be a bubble top right now and that's bad for those stocks. But are we there yet? Right now it's an equity rotation. Now this can change pretty fast, but that gives me a little bit more reason to think that we're supported here as opposed to the situation where it's a major risk off scenario. So this isn't like extreme calls. It's big because the December end of year expiration is always the biggest expiration of the year. If you saw that the stock dropped 14 plus percent, what would you think put values would be doing?

[Jack]

I would think they'd be increasing. Am I right?

[Brent Kachuba]

You are wrong.

[Jack]

You've now TV up to actually have my best macro take of all time, which is we are not going to have 25% GDP growth. So, Brent, I'm planning a very, very aggressive biggest options expiration ever title for this. So I'm hoping. I haven't looked yet, but I'm hoping you're going to deliver the goods in the presentation to back that thing up.

[Brent Kachuba]

I am.

[Jack]

I'm.

[Brent Kachuba]

I'm going to go for it. I think this will be the biggest options expiration ever. And options volumes, they just keep growing. And so that's good for us here at the OPEX effect, because you want bigger volumes. We're just talking about this. We're going to talk about this in a couple minutes as we usually start with about 20 or 30 minutes of banter with the goal of losing as much of our audience as possible.

[Jack]

True rate with like two minutes of options expiration analysis after that. That's usually our plan.

[Brent Kachuba]

We were talking about this before. Do you know who originated the Santa Baby? Now, this is supposed to be Santa Baby. Like, are you going to give us the rally? And statistically, the evidence is that we get a Santa Claus rally, Jack. But. But. Well, it's ruined now. But the original, the originator of Santa Baby was Earth Kit, which I didn't know.

[Jack]

I did not know either. You just, you just educated me right before we started on that.

[Brent Kachuba]

Yeah. And then learn something.

[Jack]

You learn something with every OPEX effect, right?

[Brent Kachuba]

That's right. Then Madonna. Madonna, 1987. Jack, that makes us feel pretty old. Taylor Swift, Alicia Keys, Michael Buble did it, apparently Arian Grande.

[Jack]

And then.

[Brent Kachuba]

We're joking now, us. So here we are.

[Jack]

Yeah. Yeah. No one wants to see that live duet, friend. I'm pretty sure of us performing Santa Be. That would be probably. If anybody's left at this point, they're going to be gone. If we try to do that.

[Brent Kachuba]

Yeah, but. Yeah, we'll shut it down.

[Jack]

Yeah, exactly. But shifting to the markets, I mean, it's been.

[Brent Kachuba]

Yeah.

[Jack]

I mean, this AI just won't stop. Like, it just keeps going. You think there's like something that's going to derail it and then it's like, here we go. We're going again.

[Brent Kachuba]

It's such an enigma to me because I guess when you think about the Internet bubble and all that, and you'd see like the advertisements on, you know, TV like pets.com and fiber's getting Laid, but it wasn't just like this thing that felt really useful maybe because, you know, like, we weren't all shopping on the Internet at that level or whatever it is, you know what I mean? And like, I, I'm guessing that you use like AI as much as I do for just like everything now. And it's like that's my default search. And it's like, so you're using it. But then it's hard to like realize that it can be a successful product. But the billions and billions and no trillions of dollars flowing into it, you know, still might be a bit too much money. So it's like, it's a very hard thing to reconcile when you're sitting in the woods in Connecticut trying to think about the economic impacts.

[Jack]

We've talked about the podcast a lot is the idea that it's obviously going to be a huge thing, but whether the builders of the infrastructure will be the beneficiaries is a very big open question. With the Internet and stuff, that was not the case. I mean a lot of those companies didn't make it, that built out the infrastructure. So that'll be the question as to whether it's different this time. And you and I are probably not capable of analyzing it. But I will say the more I, the more I look at it, the more I become, I go away from like my value investing skeptic that I am of this. And that's probably when I'm all in on this. It's probably going to be the top. But like I find myself now when they're saying, you know, oh well, power is going to be a huge problem for AI, I'm like, well, obviously it's not because we're just going to go, we're going to build data centers in space and they're going to communicate with lasers with each other. Like, why would we, how could that possibly be an issue? That's not even, it's not even a minor problem. When I get into that. You probably are, maybe you're getting towards the end of the road. I'm not sure.

[Brent Kachuba]

Yeah, two questions on that. Number one, have you bought silver yet? Because if you have, then, then that's an important signal for later here in the conversation. So are you got more room to go, everybody? But then the second one is this whole thing struck me that it's basically a call option and you know, you got to spend the, the, the money on the data centers. Everything else. If you want to be in the AI game, you don't want to lose. That's the argument. But you can pay too much for a call option. As we've discussed many times on this Podcast Jack, you know, where maybe you were right and AI continues to be this incredible thing, but maybe you spent too much on your data center. So I guess that's what the macro powers are trying to sort through at the moment. But that's causing some gyrations in the equity market and a little bit of uncertainty. And that's why Santa, it's Santa baby. As opposed to Santa baby. We're here, we're ready.

[Jack]

And that's why, that's why I look like it. Look at the options with you because like they say, price is truth. And you know the options market's going to tell us what people are actually betting with their money versus you and me, you know, spewing ridiculousness about AI that we don't know anything about. Like the options market's going to tell us how people are betting. So it's, it's always good to do these to get behind the scenes and see what's going on.

[Brent Kachuba]

Yeah, that. And that's right. And there's another component here. There, there's price and there's time. And I think those two things are very important in considering trading because two things can be true. AI and the whole thing could be a bubble top right now and that's bad for those stocks. But are we there yet from a seasonality perspective, is the market ready to roll over at this moment? I'm, I think not quite yet. I'm not here to say that it will in a month because I really only see about a month out. But you know, I think that the seasonality right now is supportive of the market and we're going to talk about why that is and then maybe in January all hell breaks this. Well, you know, we'll see.

[Jack]

We're all, we can say this for later when you talk about it, but this, this whole idea of the Santa, you know, the Santa rally at the end of every year is an interesting one. And I think there's more flows driven stuff behind the scenes going on than people realize when they talk about that happening at the end of the year. There's a lot of reasons and flows and stuff behind the scenes that caused that to happen or not.

[Brent Kachuba]

That, that's. That's exactly right. And, and November was an excellent example, as we'll talk about here shortly. Before we get into that, why do we pay so much attention to the options market? Options volumes continue to grow, as you can see here, from 2020 to the present, up 150 plus percent. And that's greatly outpacing stock volume and I think a lot of that stock volume is driven by options hedging flows. And then in the recent record stat, the CBO just reported in I believe it's November, that they had record adv in the SPX options volumes of 4.6 million contracts and jack 2.8 million of that on the 0dte. 0dte on an average daily basis, which is just kind of bananas that, you know, that these average daily volumes are just so 0dte based. So more records. And, and the way that this works.

[Jack]

Right, like zero DTE is, is mostly.

[Brent Kachuba]

Institutional, I would assume, and, and retail. I mean, there's a bunch of different players that I think are in there. And you know, it brings up this like this really funny thing because I was, I was scrolling through Twitter and I try to make a habit of not doing that anymore, but I was flipping through and there's this guy who is an alleged market maker saying, you know, the options flows don't offer any insight. Something along those lines. And he's like, you know, and, and thanks for my brand new, you know, fancy car or whatever. Basically saying that, tongue in cheek, that the options flows don't really matter. And, and, but he's able to buy this really expensive car. And the funny thing about this too is like the CBO will tell you the same thing that, that there's nothing to the zero dt stuff. Just like look away. But then if you go and try to buy that data, it's very, very expensive. It's like we all know the game. Like if, if, if there's nothing in there, there's nothing interesting, then the data is free. That's just how it works. So to that point, some of this data tells us that it's not purely institutional, it's not purely retail. It's a decent mix. You know, Captain Condor continues to have this massive size in the zero dte space. And is he institution or not? I don't know. He sells a discord service. Technically that's a business, but you know, so it's a mix. And I think the other thing about it is that who participates changes based on how much volatility there is, what the prices of the options are, is there a dispersion trade on or not? So, you know, it's a blended mix. But I wouldn't say it's all one thing or the other, you know, one group.

[Jack]

What are the, what are the retail people doing? Like, I'd assume institutional is mostly hedging, like is this the gambling stuff we're seeing everywhere? Else where like people are betting on these one day options or are they doing like hedging stuff as well? The retail.

[Brent Kachuba]

They're not hedging. What they're doing is selling Iron Condors. And the frequency of that has picked up. And what that is, is come in and you say, okay, I don't think the market's going to move more than 1% today. And so you sell a put spread, you sell a call spread that brackets that bet, right? So brackets around where it's trading. The way this works is if they're wrong, the market goes through one of their levels, they double down for the next day. It's a martingale betting strategy.

[Jack]

So it's, this is the Captain Condor thing, right?

[Brent Kachuba]

Yeah. So they, you know, that size has grown, the frequency of those trades has grown. I don't know if there's a lot of copycats out there. I mean, I'm sure there are. But that trade continues to work. And you know, the argument that we've been making is it's going to work great until you get that situation where the market has extended volatility for more than, you know, five, six days. And if you keep doubling down, you know, the exponential values of this thing, say at some point, you know, you could have a capital constraint. That kind of blows that, that trader that idea up. Now does that happen in a month? Does it happen in years, you know, whatever, who knows, right? And maybe, maybe it's not an issue for those guys because the odds of it happening are pretty low. Right, but that's the point. Just sort of like betting on, you know, black at the casino or whatever you can go for a while until you know, it doesn't work out that great. So point is, is that the volumes there are increasing and we see the fingerprints of those trades in the market every single day now. Nearly every single day, which is really important. If you're trading the S&P 500, you got to be watching those zero DT flows. And the way that this works to this point is here we see the example of AMC calls, but if it was zero GD options in theory, we'd kind of be the same thing where individual small trades aggregate into being a big position. And if you're a market maker and you're there, you 90% of the trades are facilitated by market makers. So they're buying and selling contracts. In this case, everyone's buying AMC calls. And if the market makers are the ones selling those calls, in this example, if they're 50 delta options, so kind of an at the money option. That means that they need to buy 50 shares of stock to hedge out every one of those calls. You can see in this example, just 100,000 calls is 5 million shares of stock. That can be a lot of stock to buy, especially if you got to do it right now. Basically, any name you trade 5 million shares, like right here, right now is a lot. For example. So that is the transmission mechanism from the options trades to the actual underlying flows. Not only that, once you sort of hedge, you have to adjust your hedge based on time, which is an important dynamic. And talk about here, volatility. So is implied volatility is the value of options going up or down. Very important topic as we get into here. And then obviously as the stock price changes. So you have to constantly update these hedging flows. And that's what we're monitoring for here, right? We're trying to predict how these hedging flows are going to change and how that's going to impact the market.

[Jack]

And the reason we do this today, and today's December 12th, we're a week from options expiration on December 19th, which is also my birthday, by the way. But we. So the reason we do it now is because we're up ahead of this and we know that this options expiration can be a turning point in these flows, right?

[Brent Kachuba]

Absolutely. And I say absolutely because we just had a very great example of that in November. We're going to talk about that momentarily. And I think it matters for December as well. That's my forecast here. Not all options expirations matter in the same way. There's some that have a bigger impact based on the positions there, based on the volatility of the market, et cetera. But the idea is that into that third Friday of the month where the bigger positions expire, we see hedging flows related to those positions build up as well. And then at options expiration, those hedging flows goes away. The positions go away. Excuse me, the positions go away, then the hedging flows go away. And that can be lead to turning points in the market. So that is why next Friday matters again, probably the biggest options expiration ever. At least that's kind of why it's projecting right now. And there is a statistical edge to this in this case, you can see here. And it matters if VIX expiration occurs before or after in terms of these stats. VIX expiration is actually before in this case. And so you can see what tends to happen is the market will trend higher or trend lower into an expiration and then that performance will flip or the trend, the trend will change after the expiration. You can see here it's about a 60 to 65% chance of the performance shifting based on our data from that we've compiled over the last three, four years. One of the things about this options expiration data is the options volume has continued to grow so much over time that you don't have 20 years of data that you can kind of go back towards. Right. You really got three or four years where the options volume is, is material or as material as it is now. Right. Plus we have zero DT expirations which are only a couple years old. You know, it's not the same thing as five, ten years ago where there was one expiration a month or one expiration a week, etc. Disney plus wants to know, are you ready for Marvel Studios Thunderbolts the New Avengers, now streaming on Disney plus? Let's do this. One of the best Marvel movies of all time is now streaming on Disney plus. Hey, you weren't listening to me. I said Thunderbolts the New Avengers is now streaming on Disney plus. Meet the new Avengers. That's cool, man. Marvel Studios Thunderbolts, the New Avengers, rated PG 13, now streaming on. You guessed it, Disney.

[Jack]

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[Brent Kachuba]

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[Jack]

So we found that when realizevol is high coming into these or low coming into these, that can sort of change what happens, right?

[Brent Kachuba]

Exactly. The volatility trend is the same. So to the point of November, volume was spiking into November options expiration and then volume got crushed after expiration. And it's a similar thing here where we're going to go into December and I think that the volume is going to get crushed. It's getting crushed now. And I think that's going to continue because of holidays and some of the things we're talking about. And then what happens after New Year's? Everyone gets back in seat. Those suppressive flow. Suppressive flows are gone. And then maybe things can get a little more volatile right into. Into January, as an example. So the stats show us that the Realized volatility, I. E. How much the market moves, changes. Right. High volt shifts to low volume, low volatility shift to high volatility around these options expirations. And, and right now if you were to say how much is the options market suppressing volatility? It's about average, I would say. One of the things that's changed to the point of the data changing is that so much of the volatility suppressing positive game is driven by zero dte traders. Right. They come in today and they sell their options. So some of what I have to do now is trying to predict are they going to come in today, are the size, the size they're going to trade, is it, you know, going to be similar what's happening in that zero dte space as sort of an active volatility suppressor? Whereas if you see volume start to spike and risk pick up, those 0dt flows often go away. And so that's an important dynamic to understand as well.

[Jack]

So this next slide gets into what we were talking about before the Santa Claus rally. And I also would think, I mean they're not ready. I mean we had Fed yesterday, so I would. Or two days ago. So I would think there aren't many huge events coming up right on the calendar either.

[Brent Kachuba]

Yeah, you know, it was funny because after fomc the volume stayed a little bit sticky and I was looking at non farm payrolls and CPI next week. There's a little bit of event volume tied to those data prints and those data prints take place right before Christmas. So how much are people really going to be sort of immediately reacting to that, especially in the end of the year. But what was interesting is the volume seemed to really kind of shift around. Oracle earnings on Wednesday night and then Avgo last night. The both of those stocks are down sharply after earnings. I mean Oracle more so than Avgo. And the NASDAQ is kind of getting beat up a little bit on this. So those to the point of the our conversation starting about AI, you know, that is definitely hitting that Mag 7 complex right now. Right. And so there's some stock rotation we're gonna talk about, but to the point of volatility. We always cover what we talked about in November. But you can see the market absolutely was dropping like a stone here into November opex. And the low of the market was on OPEX day on November opex. So there's the absolute low of the day and then look what happens after that. You clear out these positions, you clear out the expensive volatility the positions that had a high volatility that brings this relief rally. And where does the relief rally time out, Jack? It times out on Black Friday. And if you think about what's Thanksgiving, it's a week of holidays, right? People kind of stop paying attention to the market because it's a short week. You start traveling. There's Black Friday is a half day. And so that's just a volume crusher, right? If you're owning puts over that holiday week, it just stinks. And so, you know, you get that decay. And so here you see, you can, I mean you time it literally to the day. This is Black Friday, that little green bar. And then we sort of just trended sideways until fomc. Now FOMC has released a little bit of positive market sentiment. Some of that's getting unwound a little bit here today as we talk. The market's down about 60 bips, but we're still about 1 to 2% of all time highs. And so, you know, things are seasonally looking like they're going to be in line. But we'll see if that continues. We're talking about the size of options expiration. We measure options by delta. Delta explains how much stock value these options positions have. You're going to see Goldman or some of these other groups come out and say, you know, 6, $7 trillion. And kind of like the Michael Burry in the 13F episode where one option they consider to be worth 100 shares of stock. That's actually not true. The delta gives you a more fair approximation of how much that options notional is. And so in this case here you can see that most of the weighting of what is expiring is in the S&P 500. It's always like this. But the call values are much higher relative to puts. This was not the case in the November options expiration. So this is a call weighted expiration to the point of market sort of rallying into an options expiration like this and ball getting crushed. This should be a tailwind. This, this flow should help to keep the market propelled into this options expiration next week. And then volatility sort of subsides. And then you have this situation where, okay, end of December, these bullish positions are removed and maybe that allows January to be a little bit more volatile.

[Jack]

So am I not allowed to use the $7 trillion expiration of my YouTube thumbnail or.

[Brent Kachuba]

No, you still can. I think you can get $20 trillion if you want.

[Jack]

Whatever. Yeah, I try to have at least some basis in fact for what I'm putting on there.

[Brent Kachuba]

So, I mean, trillions isn't even like a number that we even bat an eye at anymore. It used to be billions was this big number, and now it's just like, well, you know, if you.

[Jack]

It's the same thing with the YouTube thumbnails, like, because people don't care about billions anymore. You got to keep escalating to get to the point that they'll click. You've got to put like, ridiculous numbers. I mean, I'll. I'll be to quadrillion probably fairly shortly.

[Brent Kachuba]

I always think about, at times like this, that famous scene from Blaze of Glory where Will Ferrell's walking on the treadmill and like, no one even knows what it means, but it's provocative and it's like, that's basically, that's basically.

[Jack]

I guess that's what I need. I am interested though, like, going back to that other slide. We, we had one month here where sort of that call heavy expiration ended. Like, we had call heavy expirations for a while. We had one month where it changed, and now we're right back and I'm wondering, is there any, is there anything to read into that? Like, what the changes that happen there.

[Brent Kachuba]

A lot of that is a function of. Is the market rallying or not? Right. Because delta is. Is going to be higher when options start to go in the money and call values pick up. Right. And that's, and that's really what this is seeing. So if you look at a chart like this, you assume that, okay, the market has been rallying because these deltas are getting quite big. And, you know, that suggests that call values are increasing, market is rallying, volume is probably coming down. So as that expires to the point of this slide with the mean reversion. Right.

[Jack]

Okay.

[Brent Kachuba]

That probably sets us up for an opportunity for the market to have a bit of a, of a correction. So those are the, you know, that's kind of what this is showing you. It's sort of giving you an indication of what the market has been doing. Now on the downside, you could have a situation where we're not, you know, I wouldn't say that this is extreme. We've seen 90%, I think, over the summer and some of those extremely bullish months. So this isn't like extreme calls. It's big because the December end of year expiration is always the biggest expiration of the year. And I think this one, again, because the options market continues to grow in size, you know, Then you have the situation that you're getting sort of, you know, the compounded growth of that, right. All those bigger options positions benefiting from this size. So it will probably be the biggest options expiration ever. But it's not super extreme call weighted.

[Jack]

Is it a thing where the more call heavy it is, the more chances there are of a flip, like the more people are on one side of the boat, the more you have a chance of maybe something happening. Happening in expiration?

[Brent Kachuba]

I believe so. Particularly if you feel like people are long calls. There are these situations where everyone was piling into Nvidia calls or piling into, you know, the AI trade was so hot over the summer, for example. And what happens in that scenario is you end up where the call values are being pushed up a lot, right. And, and you're getting the dealer or the hedging flows, I think, really weighted to one side or the other. So people can both buy and sell calls, obviously. And so in this situation, there's evidence that people are selling a fair amount of calls and that's suppressing volatility. But if you had a situation where everyone is buying calls and deals or short calls and there's this chase, well, that chase can die, right. When these options positions expire. It's the same thing with November. Everyone is buying puts, right. And what happens at options expiration? Well, those puts all go away. So once those puts are gone, it's like, what am I hedging now? I don't have anything else to hedge. So up we go. And that was kind of an extreme expiration in terms of what size. The vols are getting rich heading into this options expiration. So, you know, you have the situation where when you wipe the sweet clean in an extreme scenario and November was a little bit extreme, you know, then, then you can really get a stronger reversal.

[Jack]

So this next slide gets to what we talked about before, which is this is a very, very large expiration.

[Brent Kachuba]

Yeah, you can see here the call values delta notions for single stocks is just massive. This is the January options expiration, which is not January, tends to be a fairly good size expiration. But you know, the December is just huge. And, and so this just puts that into a little bit of context. Again, I think this will probably be the, the largest ever options expiration. And so the, the impact of this should be, you know, pretty decent in terms of releasing volatility. The issue with this is that not only do you have the December expiration, but then you go to Christmas and the holiday and then we have The JP Morgan position, which may or may not be a function, you know, in, in play here at 7000 we're talking about as well. So you have to think about this as like a season expiration season. Right. As opposed to like a single event I think in this case.

[Jack]

So as we look back to what we said last time, the first thing we had looked at is this idea that no asset is safe. And a lot of the safe assets had been pulling back in our last episode.

[Brent Kachuba]

Yeah, it was interesting because gold was dropping, bitcoin was dropping, stocks were dropping, bonds were reversing. Right. So you know, there was this real sort of asset spasm where it's sort of like it wasn't this rotation out of stocks and into bonds or whatever it may be. It was sort of just like dump everything thing. And we had titled our, our November expiration piece, you know, Conjense and Huang save us. Right. And, and because that Nvidia earnings was so important and if you just fast forward or reverse, excuse me, back then, you know, the, the government shutdown was there. We weren't getting data points, the Trump approved rating, which I haven't checked recheck, but it was in the dumpster. Maybe it's gotten better. There was a lot of uncertainty around what the rate cut was going to be. Obviously we got that cut now and now there's uncertainty about what the next, you know, January rate situation will be and who will be the next Fed governor and all this other stuff. Right. So that uncertainty is still sort of kicking around. The Oracle credit default swaps were surging. That was another thing. And so that's why Nvidia was so important. Like tell us that everything is still okay. And it turns out the Nvidia earnings are kind of like they're all right and the stock is very flat relative to earnings. And so that's a critical thing to note here. But the, the overall sentiment was just very ugly. And you know, here's microstrategy. Microstrategy. People were starting to talk about like is this thing going to get liquidated? Stock traded down to I think 170. They were able to kind of buy themselves some time with I believe a debt sale. And so you know, the pressure here came off and bitcoins rallied a little bit but you know, everything was sort of crashing. We were looking at, this is our compass. The more you stocks are to the left on this chart, the more put weighted they are, the more people are buying puts versus calls. And so we had this situation where earlier in November, people were pretty bowled up on all these names. And then suddenly he's like, I just want puts. And you just sort of fast forward to this. The sentiment was pretty bad, but volume wasn't going crazy. So, like, volume was sort of like the Goldilocks situation where it was like, not too cheap, not too rich, but, you know, kind of just simmering. And we didn't see this massive bid details. And so the, the problem with that was, in our view was like, if you didn't buy puts, he didn't really want to buy them now because they're a little bit too rich, but they weren't so rich that they were an obvious sell, right? It was kind of this weird middle spot. And, and not only that, the other thing to take from that is that there wasn't a panic in the market, so we were getting a sell off, right? But there wasn't like this reach for, you know, tail hedging protection where you'd see these vols sort of spike and see like the V vic's rich, you know, just go crazy. So that stuff really wasn't necessarily showing up. And so our point here was that it looked like people were sort of not bidding up the. The put protection, even though it was a little bit rich. And you were gonna have this clearing event. And a lot of that clearing was based on Nvidia. And if Nvidia was no big deal, then the market kind of continued to rally. You know, you sort of fast forward, obviously Nvidia was just sort of like whatever it was in line, no big deal. And we're Talking about this 7,000 level into the holidays. That's still the big level, right? So, so there's no sort of there. And interestingly, we thought that given that balls were expensive and that the ball clearing function may help the market to rally. We were talking about this call fly position into December expiration. And this position has been, all right, it was a 6700, 6800 call fly, and that had a decent return on it. And the point that we were also trying to make was if you're trying to buy puts when the Vix was already at 25, you probably already missed it. Now, if you had to hedge, well, that's a different story, right? If you have an equity portfolio, you need to protect it. Well, maybe you got to buy put, but if you're just speculating trying to buy puts when the Vix was already at like 25, you probably, you know, it's probably a little too rich, right? And, and these Puts obviously got eviscerated.

[Jack]

On the Nvidia thing. Like how much of that reaction we say we see like in the day after earnings is options driven? Because I do remember like the earnings were pretty good for Nvidia and like people thought the stock would be up and then it was down. And I'm just wondering like how much of that back and forth like those reactions are based on what's going on in the options market. We see a big stock like that.

[Brent Kachuba]

Report, Nvidia is a, is a beast into itself. You will see the S and P term structure reflecting the Nvidia earnings report, which is really quite unique. This is really at the moment another stock that does that. And you know, Nvidia represents so much of the trade, right? Not only is it huge in terms of its size in the S and P and the nasdaq, but also, you know, it represents the AI trade. And so not only do you have a situation where volume contracts around the Nvidia itself, but you also have the market volatility, contracting and generally volume contracts. The market's going to catch a tailwind. We call this kind of a Vana based tailwind. And the idea is that as volume contracts it invokes buying of equities. Now Nvidia tends to have a lot of short call positions now. So if you think about it, in Apple and Nvidia like everybody owns those, right? That's just, I mean by defect, but by fact, if you own The S&P 500, the NASDAQ, the QQQ responders, you own a big chunk of Nvidia for example. But a lot of people also just own them because they're the best of breed. And then what do they do? They sell calls systematically to try to increase their income, right? It's kind of the, you know, the boomer strategy. Let me just keep selling calls. I'm never going to get rid of my Nvidia stock. Let me just keep selling calls against it. And so I think that leads the actual volatility in Nvidia to be quite a bit less right than, than the market. So you think about like the beta, the S and P, it's not that high. Like Nvidia is not this crazy volatile stock anymore that something maybe like a Palantir or even like a Tesla is right? There's kind of like a different tier for Apple and Nvidia and even Microsoft where they're becoming kind of these. I mean Microsoft and Apple I think are already a little bit sleepier in terms of their Volatility. But I think Nvidia is kind of coming that way where it's like event comes out, volume contracts, stock does nothing. And that's kind of, you know, seems to be the way that it behaves.

[Jack]

Yeah. With Nvidia you've also got like those leverage single stock ETFs. And I mean they may not be big enough to make any kind of difference, but there's, there's just all kinds of stuff going on with like a big name like that.

[Brent Kachuba]

I think they did. And those things are kind of reflexive. What I mean by that is like when people were buying tons of calls like in January and June of, of last year, for example. And you know, that was when Jensen is signing women's chests and stuff. And like then you get that leverage, right, of the options market because people are buying so many calls and it's making the stock go up. And then people are piling into the, to the upside because no one buys a 5x ETF in some stock that hasn't been moving for two, two, three, four months. Right. You buy the 5x levered thing in the thing that's going bananas because you think it's going to continue. So that's where this leverage sort of spools up and feeds on itself. And again, you know, Nvidia buy for, I think by a lot of measures it sort of just stalled out as a, as a stock in terms of a leader. Right. Doesn't mean I think he's short or whatever. It's just sort of like the more mature these names get, the bigger they get. It's like the harder they are to move is sort of what it, you know, what it is do you know.

[Jack]

Are there, and you may not know this either, but are there like billions of dollars in these like leveraged single stock ETFs like Nvidia or is it, are they smaller than that? I have no idea. No concept.

[Brent Kachuba]

Because that's the size ebbs and flows quite a bit. The ETF complex is huge. You know, billion, billions and billions of dollars are in there and it ebbs and flows. Right. Interestingly, you keep getting these new ETFs, but for the first time ever, we're just talking about this recently with Matt Cashman, who I know you know where they're starting to pitch these 5x levered ETFs now. And, and now they're starting to be some comments from the SEC and even some other entities, quasi government entities, saying like, okay, like let's, let's slow our Roll here a little bit. 5x ETFs are probably a little bit too rich for the US markets. Like, let's chill. I think in Europe there might be some 5, 5x, you know, American based ETFs. But the point is, is that, and I think that stuff has gotten a little bit over its skis and it's also a function of how well is the stock market doing. I don't think those levered 5x long ETFs are going to do that well, if the market starts to have a material correction, obviously. Right. So I think the capital is very transient in there. It comes in and it comes out really rather quickly. And clearly the AI momentum is not there. Like it was over the summer, for example, when a lot of this stuff was rallying quite a bit. If anything, people are a little more focused on that soft downside, I think, at the moment, as opposed to saying we're going to get another 5 to 10% of growth and it's our manifest destiny that we continue to rally here.

[Jack]

And to your point, I think Dave Nadig tweeted about this, I think they did reject finally, like they found a level of leverage that they, they were going to reject in some of these ETFs. Like, it's gone too far, which I think everybody was trying to figure out what that's going to be like, how far will it go before they finally say, all right, this is, this is too much, we're not going to allow this.

[Brent Kachuba]

Yeah, and I don't, I don't know. I mean, I think it's harder to make money in ETFs than, you know, one would think. It's like, how big can the ETF ecosystem get? Right? It's not free to open these things and to keep them open and you gotta have your swap agreements and blah, blah, blah. So, you know, I don't know, at some point, do you just sort of like eviscerate the landscape because there's so much being offered that, you know, capital really can't flow into any of them. So, you know, it's sort of like a balancing system where you just go, okay, like there's too many of these things now. We gotta stop creating new ETFs so that, you know, we consolidate the number of ETFs so that capital can sort of concentrate in a couple of these things and, and you know, kind of kind of the economies of the whole thing start to make more sense.

[Jack]

And to your point, like the market deals with this stuff over time. I Mean when there's some sort of significant blow up, some sort of significant down market and a lot of these products get destroyed, I mean that, that gets the capital out of the product. So you know, to some extent the market takes care of this at some point on its own. We just haven't had that because we just had this consistent rally.

[Brent Kachuba]

Right, right. And the best example that obviously is the 2019 Balmageddon thing where the XIV, you know, blew up and all that. So as much as we hem and haw about the ETFs, we made it through April this year. Right. With a lot of ETFs and the market didn't, didn't blow up and die. But you know, you look at some of the fingerprints of these things and you can see them right when they start to spl up. And so, you know, always kind of quiet on that front at the moment, but we will see what comes in the new year.

[Jack]

Well, as we move into December, you almost gave me the title here I wanted, which is value is back but more small caps over semis is what I will take. More small caps over semis. And I'm hoping at some point we will get the value is back and the projections on one of these.

[Brent Kachuba]

It, I mean the data value is back. We're, we're flipping around here. You're going to start making presentations and I'm going to ask you bad questions about value stocks. So the, the IWMs are, are moving. Right. You can see here. So I'm a little bit guilty of not paying a ton of attention to iwm, the options complex and the Russell's smaller than the, than the S and P by, by orders of magnitude. But so I was thinking that the IWM breakout was more of a phenomenon of the fomc. But if you look back to sort of Rate Post Nova opex, you can see it really started to outperform. That's the green line on your screen. So I just thought that was overall pretty interesting. And even here it's given some back today, but after hours last night when the NASDAQ was kind of feeling it because of poor Avgo earnings, the iwms are up and the Dow obviously performing a little bit better. So the reason I think this is important here is because it speaks to capital rotation inside of the equity space. So moving towards maybe some of the value stocks, God forbid, Jack, that you mentioned or some other equities kind of out of AI and into some other stuff is what this speaks to. And the reason that Matters to me is because if you have a situation where people are selling equities to go into bonds or cash or whatever, then you're going to see correlation spike, equity correlation spike. So in this case, if it's a rotation, the rotation can be, you know, not good for you if you're long tech and not, you know, underweight of value or of IWMS or anything else. Right. But that's not as dangerous as a situation where people are bailing out of stocks altogether. And the in the barometer for that. We've talked about correlation in the core 1m signal many times here before. But when we dump equities all together to go into, into bonds or some safe haven, then you see correlation spike. What that tells you is that people are selling all equities regardless of what's happening because we gotta go into something else. And when the correlation spikes, usually you get vix spiking involved. Spiking. Those are the really big risk off scenarios in case, in this case you're seeing the correlation index spike around the tariff situation, for example, or in mid November, mid to late November when there was a lot of consternation around or we're not gonna get a rate cut anymore. Oh no, no. And Bitcoin was dropping and gold was dropping and bonds were going the wrong way and stocks were going the wrong way. You saw this correlation spike. Right. Cause people are getting out of equities and going into cash or whatever it may be. So right now, even though we're in this weird rotation, the market's trying to digest things and it feels chippy because Oracle and Navigo are both not great and the Fed uncertainty is kind of there still. We could get the rate cut, but what happens next? Correlation is coming down, which to me just suggests that again right now it's an equity rotation. Now this can change pretty fast, but that gives me a little bit more reason to think that we're supported here as opposed to our equities are supported here as opposed to the situation where it's a major risk off scenario. Yeah.

[Jack]

The one thing I never like when you say small caps might be back is that you only think in one month time frame. So my, my decade of small caps that I'm looking for, you just, you're not going to be able to tell me when it's come.

[Brent Kachuba]

The problem, the, the problem with small caps, Jack, is that there's so many like false breakouts. I mean I was, I posted a chart of this as our, our founder's note. This Morning. I just bring it up here just to bring an example. What do they call this? Breaking the fourth wall, I think is what, what I just did here. So there's so many false breakouts in iwms. When I was kind of looking at the chart like. Cause normally you think like new all time highs are great, right? That, that generally means like I don't want to sell new all time highs but like Russell's done this fake, fake out thing, you know, and again I, I'm in short term. So many of you probably look at this trend and go, the trend is up. Don't want to fight that. But you get these weird false breakouts, right? Like here or here. And then that leads to pretty good downside. And if Your view is 30 days like mine, well, that's pretty nasty downside. So Russell does this weird thing where it's like false breakouts all the time and it's just, just another one of those. I don't, you know, I don't know. I wouldn't, I would say that I think before these December, end of December I would say that we'll probably still continue. That's the way that I, I'm leaning right now for reasons that we're going to discuss. But. Yeah, Jack, I don't, I don't know that I'm going to load, load the boat on IWMS at the moment. So maybe that's your buy signal. Yeah, yeah.

[Jack]

Whenever, whenever. As, as anything if it's going down. So I won't say anything one way or the other. But, but anyway as we, as we move on to your next slide here.

[Brent Kachuba]

On a real basis, the value stocks are doing great.

[Jack]

We're looking at some events that are coming up here and what you're seeing.

[Brent Kachuba]

Yeah. And the reason I'm starting usually I finished with this slide, like I always like to say, what's the trade? And, and that's what people want. Well, 7,000 is this level. It's not a new level that we were flagging in the November expiration we're talking about as well, this big level for end of year. And the reason is because there's a ton of open interest not at, just at the 1219 expiration which is next Friday. But this is also where the JP Morgan collar trade is. We talked about the JP Morgan collar trade so many times here in the past. And why this matters is because there's about 70,000 total contracts at the 7,000 strike for 1231 expiration. Not 1219, but 1231. So what that means is that if we can get up into that kind of over 6,900 area and close, then I think that that 7,000 area becomes just this sort of magnet where it's like it just sort of locks the market in. Now of course we can't, as we speak right now we're at 6863. We closed at 6900 yesterday. So we just can't seem to get ourselves over that level. But it sort of becomes this, this again area of pull where if we're close enough at the right time, then it matters. Obviously if we're kind of below 6900 then the pull of that strike starts to dissipate over time as opposed to strength. And so that's why that level is so important to the upside. It's also a big round number and people love big round numbers. Now at what point do we have to say Brent's thesis about the market holding steady and rallying into the end of the year? What, at what point is that trade off?

[Jack]

For us?

[Brent Kachuba]

It's still 6800 and that's because under 6800 we have a lot of negative gamma. That negative gamma increases. It means volume, probably spikes and it means that the directional flow start to push the market down. And so that's our risk off level. If we break 6800 then we're gonna be looking for the market to trade quite a bit lower, possibly as much as 6,600. At the moment though, we're still favoring the upside. And why is that? Because of the holidays coming up, because of the volatility crush that we're experiencing. And so that is a tailwind for markets. And 7,000 is only about one, one and a half percent up from here, Jack. Right. So it's not, you know, you're not talking about thinking that we're going to get like a 5% end of year rally at this point. It's a, it's a mild increase. And again the, the, the, the, the holidays and, and the passing of a couple events I think can help. Not only do we have the holidays coming up, you have CPI next week and non farms which have a little bit of event volume, not a ton, but enough to sort of, if they pass without issue, that can offer like a little bit of a kicker to stock. So this is why I'm leaning long at this moment until, and unless we break that 6,800 level again, that would be the signal that it's so over, as the kids like to say.

[Jack]

I'm wondering just, just looking at the Fed meeting on the thing, I'm wondering like if Fed meetings will kind of be back from a volatility standpoint next year. I was just thinking like, what, what do we have? I think we had three dissents in the last Fed meeting. We had one to one to cut more and two that didn't want to cut at all. And I'm just wondering as that plays out, like it seemed like as we've done these month to month, like the event fall for the Fed meetings hasn't been what it was once back in the day. And I'm wondering if that'll pick up maybe as we head into the new year with more uncertainty about what they're going to do and more dissents and stuff like that.

[Brent Kachuba]

Yeah, it was kind of a funny thing because I was talking to some new traders and the market was up a lot after F1. I'm not up a lot, was up about half percent. And they were, how can this be? You know, everybody already knew we were going to get the rate cut. And it's like, look, the, the, the cut itself was priced in 90% chance, right? It's about the forward guidance. And the forward guidance, from what I understand from guys like Lyn Alden and Darius Dale, was like, you know, we got, we're getting qe. They joke about it like QE not QE thing. And so that's why the market sort of wasn't anticipating that. But to your point, there was a lot of dissent and then adding on to that is like, who's going to be the next Fed governor? And Trump says we could have 25% GDP growth. Like so, you know, I'm not even pretend to know. But to your point, the uncertainty around the path of this stuff definitely seems different. Like there's no clear odds of a rate cut for, you know, next year's meetings at all. Right. And that adds the volatility or adds to the volatility of those events and makes them arguably a little more impactful.

[Jack]

Well, you've now teed me up to actually have my best macro take of all time, which is we are not going to have 25% GDP growth. I can actually say something. I could actually say something and have it actually turn out to be correct potentially unlike my other ones.

[Brent Kachuba]

That's so funny.

[Jack]

Is this a. Just as we get in this GP Morgan collar, like, is this as big a deal as it used to be? I feel like people talk about it less, but I don't know like in your world, maybe they talk about it just as much like I feel like, is it as much of a big deal and a potential turning point and a pin for the market as it once was?

[Brent Kachuba]

I think it still matters in the ways that it has always mattered. And the reason I say that is because if you're near the strike at, into expiration, it's going to matter. And I can think back to March where the put was in play and the market really respected that level as a downside level. And then the, the, the levels really have not been in play in, in June and September I would argue. But if we just go back a few slides here, Jack, to. Well, let me, I can bring it up here just to talk about this. In September, right? The, the strike was, was possibly in play into September. And I say possibly because this is September options expiration right here. Right. And you would say, Brent, we didn't do anything for Friday the 19th expiration, but when was the end of the month? Right. If we fast forward this just a little bit, you know, where was the J.P. morgan collar? It was sitting right in this area where the market seemed to kind of make a low. And I believe there was a situation with Iran around here, if I remember that correctly, where like the Iran situation was on again, off again. So that added a little bit to this market movement. But the J.P. morgan College is like right in here. And so the answer to your question is it still matters if we're near the strike to that point. The strike right now is 7,000 as you can see in our slide here. Sorry, I'm going the wrong way on my wheel here. The 7000 strike is huge and there's a ton of gamma at that strike. The gamma is the sort of the volatility suppressing flow in this case. But the gamma only matters if we're near 7,000 as we get towards that expiration and near changes based on how, how far in time we have to go. Right. So a hundred points or 1% away from the strike right now is probably near enough. But if we're on 12, 28 and we're 100 points away from that strike, that, that strike probably has no impact anymore. Right? Because it's too far out of the money. And so that's why we measure the game of that thing too. Now there's massive 70,000 contracts at a specific expiration is, you know, is quite big for a random expiration like that. And so again, if we're within kind of 1%, call it, you know, into that last week of that strike, then I think it really is going to be a pretty big force in play. But if we lose that 6,800 level, then obviously, you know, 7,000 doesn't matter, nor do any of the positions at that strike matter.

[Jack]

And for those who haven't watched us talk about this before, the idea is this strike is a magnet. So if it gets closer, it'll get pulled in, but I think also like, it makes it harder for it to run through it and break on the other direction as well. Right?

[Brent Kachuba]

That's right. And there's been several times where you kind of, we've, you know, traded over the strike because to the same point, if it's, let's say this strike doesn't expire for two more months and we're at 7,000, well, that strike doesn't have any impact. Right. It's just not, it's not near enough to expiration where that Gamma is not so, so big. Gamma concentrates for at the money options. And Gamma also increases as we get closer to expiration. So if you think about Gamma, just replace Gamma with hedging importance. And so the hedging importance of that strike is going to be biggest if we're near the strike at expiration. Right. That's where the, the, the hedging impact matters the most. So that's why, you know, it is a, a bit of a, a moving target. And that's why I'm saying, look, if we can close over 6900, then that strike is really in play from a hedging flows perspective, from a pinning perspective. You know, right now we're, we're, we seem to be sort of, if anything, shooting the other way. You know, we're at 68 15s and P right now headed down. So that's going to reduce the impact of that, of that strike.

[Jack]

And in this next slide you're going to get the idea that it can dampen volatility.

[Brent Kachuba]

Yeah. And this is from this morning. And again, S and p was at 6,890 this morning. All right, this again, market is a little bit weaker here. But what is fascinating to me about this is that if you track the S&P 500 implied volume level, so we have strike across the X axis, expiration on the Y. And so this is called fixed strike volume and it's showing you the implied volume value. So what's the options price essentially for every strike at every expiration? And highlighted in these boxes are implied vols that are 8, 9, 10%. Right. That's as low as you get in the S&P 500. Maybe we've, we've scraped a six by at some point over the last five, 10 years. But 99.9 percentile readings here. These are very, very cheap options to the upside and they're not that far out of the money. It would be one thing if you go, hey, this option is 2% of the money and it's a 9% implied volume or something like that. But in this case they're near the money options. There are sort of options that were in play, at least as of this morning they were in play. Right. And so this stuff is very cheap. And why are we getting this so cheap? Well, it's not only the holidays, but I think it is also related this JP Morgan position. Why? Because the dealers are long that position at 40,000 contracts at least and there's a total of 70,000 or 8,000 contracts sitting there. And so they may be offering calls around that, trying to offset some of that risk. And I think that is adding to sort of the vault dampening that we're seeing at these upside strikes. You also see that between these two yellow boxes, the volume increase and that's because we had the cpi, VIX expiration, non farm payrolls, opex, I think all those key ball a little bit higher, right? That's the event ball that we talk about. So I think that the reason that this volume is so cheap is it's a ball damper. And the argument that I've been, the JP Morgan collar is the damper. The argument that I've been making is that these calls are very cheap. And so I am, I am choosing to express upside by buying these calls. The advantage of this is that they are cheap, right? They're, they're, the price is low, right? That's, that's an objective statistic. Does that mean the market rallies? Not necessarily. But if you're buying a cheap option, right, then the, the, the glory of that is that if you're wrong, well, it was a cheap option, it was a low price option. I didn't overpay for it. I was wrong. Fine. I lost my money on a cheap option. It's great. Conversely, if you buy a put when the Vix is at like 80, you're paying a ridiculous price for that put. And so you, your odds of getting paid on that are very low, right? So the argument here is that you buy the cheap calls and if the market rallies, they should pay off handsome. Handsomely. And you know, I've laid out this construct for a while. Also think the market could rally? There's plenty of times where I don't think the market could rally. So in this case, it's like, I think there's a chance and the calls are cheap. So we're going to lean into these things a little bit as a way to express upside down.

[Jack]

Do you know if that is that JP Morgan fund still growing?

[Brent Kachuba]

I haven't looked at it recently. I know the options income strategies have continued to grow, but I haven't checked out the aum. I should do that because there's not only the collar trade itself, but there's also Jeppy Jepi, which is one of the biggest income ETFs, and it's run by the same portfolio manager. And then there's qild, which is the NASDAQ equivalent. So that same guy, his name is escaping me at the moment. I apologize. Is responsible for, you know, just billions of dollars of volatility, suppressing flows. That's pretty.

[Jack]

That's got to be a freaking tough job though, right? He's got this massive trade he's got to execute that everybody knows knows is coming for the most part. Like, that's going to be hard to do, right?

[Brent Kachuba]

I mean, you know, it's a funny thing because people love income and they perceive options selling as income. And so you have this basket of essentially s and P500 stocks, right? And I think there's a little bit of a stock selection process in there, but when the market just keeps going up over time and you're selling some income and people are getting like this quote unquote income check every month, generally pretty happy. And what's funny about it is those funds trail total return in the S and P by a fairly large amount. So actually, as an investor, you are hurt by owning this product or owning these products versus just owning spies themselves, right? But it doesn't stop the assets from going in there. So, you know, from a total return basis, they're not great. But people don't seem to care. You know, it's like sports gambling. It's like you're going to lose to the bookies, but people don't care. Right? So it's. It's kind of a funny thing.

[Jack]

I want to do an episode eventually. I think I mentioned this. You at some point with you, where we go through like all these different ways options are being used inside of ETF strategies. And you can kind of explain because I think people who are buying these products a lot of times have no idea what's actually being done, like in the options market behind the scenes. It would be interesting just to go through some of these and be like, I'm getting a 20% yield on Nvidia. Like here's where that might be problematic just to think about like what actually is happening behind the scenes to make these things. And I know this is not an etf, I don't think, but just to think about like what's going on to make these things work.

[Brent Kachuba]

Yeah, that's right. And when these things get so big and they're trying to sell calls, for example, to your point before, everybody knows they gotta sell their calls and they're gonna do it on a systematic basis every week. So what happens? Like, are you gonna offer a higher price to these people when you know they'. No, you're going to offer a lower price, right? Like, oh, Jack, you're going to come sell your calls again, great, here's, here's my price and it's 10 cents lower or 20 cents lower or whatever than it was last month. Like, because I know you're coming and I know what you have to do. It's not like you don't want to sell the calls this week. It's in your prospectus that your mandate is you sell calls every month against these positions. Like, okay, you're, so you're at this kind of economic disadvantage because people know you're coming, you know, which is just another reason that it's suboptimal, even if you believe in the idea of the systematic call overwriting.

[Jack]

So getting to the next slide, what's interesting to me about Oracle is like two years ago nobody cared about Oracle. I'm sure it was a big company that was successful and everything, but it was not talked about at a market wide level. And then they spent a bunch of money in AI and take out a bunch of debt to do it. And now Oracle's turned into a very big deal. You and I have probably never discussed Oracle before recently on the OPEX effect, ever. And now it's a big thing.

[Brent Kachuba]

Yeah, it just didn't matter. And you know, bring up the chart here because if to your point, you know, a year ago no one cared and, and even, you know, in April this year obviously was still pretty flat. And then all of a sudden it like percolates out of nowhere with the AI thing. And I think there was a little bit of a tick tock thing in there. And like all, you know, all of a sudden it's like, what this is like the most important thing Ever. And they're spending money like nobody's business. And what's funny about it is I write that it's all that's impure because we were just talking about in November OpEx, OpEx effect about their credit default swaps and you know what an issue that was for the market. And suddenly it was sort of like if you're going to again measure what is wrong with this trade, it was like the credit default swaps of Oracle are ripping. And that was like this manifestation or the sum of all signals of the AI issue. So they come out and report on Wednesday night. Stock is down 14% here as you can see after earnings. And as we talk right now we just made new lows. We touched 185 here this morning. So fresh new post earnings lows. Now Jack, if you saw that the stock dropped 14 plus percent, what would you think put values would be doing? Would you think puts would be increasing in value or decreasing in value? If the stock was down substantially, I.

[Jack]

Would think they'd be increasing. Am I right?

[Brent Kachuba]

You are wrong. This is what we call put sku. Now there's a couple of different ways to measure options. And so you options aficionados don't, don't throw a shoe at my screen. The point here is what is the implied volatility of these puts. This is gray line is for, this is the same expiration, January expiration. So it's a, not a super long dated expiration but what I would call a stable one. In other words the passing of a few days don't affect the pricing. The gray line is from 12:9. So that's before Fed, before Oracle. Right, that's what, that's what we were looking at in terms of the, the, the volume. And the Stock was around 200 ish at that time. And so you can see the implied volume for these options up here, you know 67% is what that number is. I know it's a little hard to see. So you know the 150 puts just as an example, right were about 68% implied volume earnings come out, stock drops 14%. And what do you see here Jack? You see the implied volume for that option dropped about 50. So the fact that this trough here dropped particularly for the put side tells us that. Or, or suggests that after earnings, even though Oracle stock dropped so much that puts were being sold by traders, right. And you may say well Brent did they were they long puts and they sold those puts like they're monetizing their hedges. Cause they were right And Oracle is a piece of junk. No, we have this data, we call it some spot gamma synthetic open interest or sgoi. And if you see a blue bar on this chart that tells us that the market makers are long puts. So how do market makers get long puts? Jack? Someone else has to sell them. What does that mean? That means that what people are doing is selling puts in Oracle as Oracle is careening to lower prices. Right? The fact that these blue bars are higher. So this is telling us that people are selling puts. Which syncs with the fact that this skew, right, is now lower. Because what happens to options prices when, when you offer supply, when you sell a bunch of puts, the prices go down. So they're short puts and they are long calls. Now they were positioned like this into earnings itself. And that had us writing in our founder's notes that into Oracle earnings the bar was set so high, cause everyone was already long so much stock that it was like look or position long in the stock that there was no number that Oracle was gonna pull out of their hat to make those traders happy. To the point of like you paid too much for your calls. Oracle I still think put up a stinker of an earnings, you know, event and the stock is down. But the, the point is the same people didn't really rush out of their short put positions. If anything, they seem to be doubled down a little bit. Which, if you think Oracle is going to go out of business in the next 20 days or something like that, or 30 days, you're not going to be selling those puts. Now you could argue that the AI Capex story is not going to come to a head over the next 30 days. And so selling short data puts is fine, but at the same time, if we are in this super risky environment, then you wouldn't expect to see these put values, you know, dropping like they are.

[Jack]

Is this similar to the GameStop thing? Because like I remember at the peak of GameStop, like people who bought puts I think either lost money or didn't make much money because like implied volume tanked. Is this at all related to that?

[Brent Kachuba]

The, it's a little bit different. The GameStop situation was the implied volume was hitting around 4 to 500%. So you compare that to about 60%. In the teeth of the GameStop situation, you are able to buy put options for basically their intrinsic value. What do I mean by that? You could, excuse me, trade put options. So what I mean by that is you could sell a 50 strike put in GameStop for like 45 bucks, which is like, and like on 12 month basis. So, so basically GameStop would have to go to zero over the next 30 days, right, for those puts to pay off. And even if they did pay off, they'd only be worth, you know, $5 of extrinsic value, right? Because I'm selling a 50 strike put for 45 bucks. Like that's crazy. And that's because the volume just got so whacked out. In this case, it's almost the opposite. It's sort of like the volume is percolating and credit default swaps are raising all this other stuff. But we're seeing people selling puts as a response to that feels a little bit weird in this situation, if traders really thought that Oracle was about to go out of business, they would be buying those puts. And then the other part of that is in when you have credit default swaps you could bet on or you could hedge out the risk of the bonds defaulting, right? Well, the other way to hedge or, or protect yourself from the bonds defaulting is to buy equity puts. Why? Because equity goes to zero before the, the credit does. So you could buy equity puts and in credit market calamities or crashes, that's where you see equity puts get bid and their bid just sort of regards the price oftentimes because people have to hedge their bonds, right? You get this sort of price agnostic buyer of equity protection only because they got to hedge out their bonds. And so if I buy the puts and the equity goes to zero, then at least I'm going to cover some of my potential losses, right? So in this situation we're just not seeing that. Does that mean that these traders are right or wrong? I don't know. But you got to figure, you know, the options market is a positioning system for not only retail but also smartest hedge funds in the world, for example. And no one at the moment seems to be wanting to buy Oracle puts, which to me suggests that Oracle is not about to go belly up, which to me suggests that equities still should have a bit of support. Now I'm saying this with the Equity market down 1% as we speak, so we'll see how well all this holds up into next week. But still this doesn't, just doesn't scream to me that we're all ready to capitulate and die yet. January maybe, but doesn't scream to me at the moment. So as we get to the next.

[Jack]

Slide, this is why you're asking me if I had a silver position, I guess earlier in the Podcast.

[Brent Kachuba]

Yeah. And we're, we're going to wrap this one up here. And I just want to bring up this, you know, kind of last core point. So just to summarize this whole thing, there's a lot of reasons that I think 7,000 comes into play. Volatility contraction being a driver for equity markets. And the price to bet on that is very cheap. Right. So there are reasons to think the market goes up and the implied volume, 7, 8, 9% to bet on that upside. So you can buy an S and p call for 9% implied volume. If the market goes up, great, you make some money. Awesome. If you're wrong, you lost an option that you paid 9% implied volume for. No big deal. Right. And so as long as we're over that 6800 level, I like leaning long. If we lose 6800, then shows over. Right. I think we trade down to 6,600. So that's where I want to be short, that's where I want to be hedged in my equity position, etc. Etc. So those are the sort of binary outcomes or the levels that we're really watching, watching here. And what about silver? Silver is just really interesting because it's getting so much attention and it's up 6% since FOMC and 30% since basically December 1st. Call it, call it Thanksgiving. That's quite a move. Gold obviously doing pretty well. And so, you know, my response to that is, is dang. I was going to put in the Tommy, Tommy boy meme of Chris Farley with the glasses that flip up. Yeah, I don't know if you're not. Anyways, this is moving quite a bit. And the reason I think this is interesting is, and I'm hedging my discussion here because I focus on the commodities or equity space. I. My many years of experience in markets is all around equities. Silver obviously a commodity and SLV is the etf, the biggest etf. But ultimately it's silver and silver futures in the commodity. You know, that's going to dictate a lot of what happens. Now that being said, I think SLV implied volumes and options prices should mirror that of silver futures. Otherwise there'd be an arbitrage there. And to my knowledge there's no arbitrage. Right. So I look at silver positioning, SLV positioning, it's SLV implied vols as a barometer for supply and demand, right in these, in, in these extremes. And I think it's fair to say, Jack, that these are extreme price movements. If you Go on Twitter, people are telling you that J.P. morgan's about to go belly up because of their silver exposure. And, and I wanted to pause on that for a moment. The problem with this is that let's say that you did have in fact JP Morgan on the ropes, you silver buyers. And they had so much silver exposure that they the largest bank, I think in the world, maybe the Federal Reserve is bigger, but whatever, whatever is like biggest bank in the world. Jamie Dimon, who could call Trump and ask a favor at any moment. Probably he's probably one of the more powerful people in the world. Let's say that it's true that silver could, could crush them and turn them go belly up. Well, if you know your history at all, do you know the story of the Hunt brothers, Jack? So you're about to make a trade based on a friend's text, but which u do you listen to is it we could buy a house in Tulum, get optioning those options.

[Jack]

We could lose everything.

[Brent Kachuba]

Or let's do a little research, get your head in the trade and make the investment decision that's right for you. Learn [e-mail] TradeSmart.

[Jack]

This episode is brought.

[Brent Kachuba]

To you by State Farm. Listening to this podcast.

[Jack]

Smart move.

[Brent Kachuba]

Being financially savvy Smart move. Another smart move. Having State Farm help you create a competitive price when you choose to bundle home and auto bundling. Just another way to save with a personal price plan like a good neighbor.

[Jack]

State Farm is there. Prices are based on rating plans that vary by state. Coverage options are selected by the customer.

[Brent Kachuba]

Availability, amount of discounts and savings and.

[Jack]

Eligibility vary by state. I don't know. Well, I definitely know. I know some the basics of it.

[Brent Kachuba]

They cornered the silver market in the 80s. Fascinating story. Right. They started to build a huge position. And that position, sort of like a gamma squeeze, it became this reflexive feedback loop where prices were going up and they had a huge position on. And they had really. They had corn things, which I have to remember. But I don't think at the time what they were doing was sort of illegal necessarily. And so they had built this position. The silver market was squeezing. It was this incredible trade. They're becoming fabulous wealthy. And then what did the exchanges do? What did the regulators do? They jacked up the margin rate on those positions and that blew the whole trade up. Well, you fast forward about 20, 30, 40 years to the nickel trade. Remember, nickel just went kind of bananas. Not all that long ago.

[Jack]

I do remember that one.

[Brent Kachuba]

Yeah. And what happened there? What did they do? They changed the rules of the game, I. E. They just jacked up the margins. And, and before you sit here and say, well, you know, this is like some kind of crazy conspiracy nonsense, blah, blah, blah, there was a whole thing with. They think it was Cliff Asness at, at aqr, right, where they were suing. I'm allegedly, I can't remember the entire story, but one of. There was a hedge fund, I'm pretty sure it was aqr who was all up in arms about this because that change in margin. And I think they broke some trades as well. Basically what happens is the system protects itself. Right. And that's what it's going to do. So if JP Morgan was indeed on the ropes, they will change the rules of the game, in my belief and the evidence shows in history that they won't let J.P. morgan go down. They will change the rules to screw everyone out of their positions. Anyways diatribe there, Jack, but maybe that can be your.

[Jack]

It's good. I don't really know a lot about the behind the scenes of the silver market. So that actually, that was interesting.

[Brent Kachuba]

So the nickel thing was the same thing. I think they busted trades in nickel, which was what AQR was all really upset about. Not necessarily.

[Jack]

I think that's what it was. Yeah. I think they did bust trades margin.

[Brent Kachuba]

But they'll change the margin rates as well. Why? Because you change the market margin rates, making it more expensive to play, which means the leverage has got to come out and it reverses the whole thing. So that's, at the end of the day, the situation like the, the marketplace is going to survive. Right. That's what's going to happen. And it doesn't matter what your position is. If they change the rules of the game, your position doesn't really matter anymore. Right. Because you're going to get squeezed out of it anyways. All right, that was a lot. What does this actually have to do with anything?

[Jack]

It's just good, it's good to see the behind the scenes of that because I, yeah, like I said, I've never been, I've never been involved in the silver market in any way.

[Brent Kachuba]

So. But I have any.

[Jack]

I mean, I'm, I have, there have been instances in the past where they've broken trades and they've done other things and said, all right, you know, if this much worse outcome is out here, like, here's, here's what we're going to do. We're going to do whatever we do to, you know, to maintain the system. I think I Think that's certainly been the case throughout history. In many cases.

[Brent Kachuba]

Yes. And so when you go on a Twitter and you look up Silver and you see this whole JP Morgan and they're showing the silver ETF holders, it's just so stupid. The problem with that is those tweets, like the dumber the tweet, the. The more attention seems to get and then there's actually no value in offering a different kind of opinion. And then people are like, you're like in the gamestop days is like you're an anti ape or whatever people are calling you and you don't know about the latter attacks and stuff. I think ultimately, just to make sure it's clear, not that anyone asked or anyone cares, is like, I think all these assets are going to go over time. Why? Because the dollar keeps losing value. It's like that all makes sense to me. So I'm not going to sit here and say this is like a giant silver bear. Silver Bear could be the name of our next presentation, maybe.

[Jack]

I like it.

[Brent Kachuba]

The point is here, Jack, is that when I look at implied vols here on December 1st, what this, what does this tell us? This is our compass, right? Compass is the highest IV rank. So the most expensive options are on an annual basis and. And then the lower they are. So on December 1st we had the highest options values for SLV and they were extraordinarily weighted towards calls. That's why we're at the top right of this chart. If we're on the left side, we'd be more put weighted. What's interesting to me about that is that on December 1st it's right here. Right. So Silver kind of flagged. Once we hit that high implied volume, it flagged for about a week to two weeks and then it broke higher again. Right. So that there's this relationship towards extreme options prices in the asset price pausing, if that makes sense. Yeah. And as a trader, there's a bunch of interesting trades you can make around betting that the volatility sort of comes down. And in this case with the stock going up or the asset going up, volume is going up. So you would expect if the stock goes down that the volume would come down. And so our pitch at the time and to subscribers and I still personally have this position is put flies in silver because that would bet that if silver comes down, if I'm short some put options, right. The volume will come in as well. And so that it's called a one by two or a put fly. And that's a structure for another day. But the point here is that what is interesting is silver keeps making new highs. But this trail is showing us that over the last 10 days we're seeing the implied volatility of those silver options come down and now the board is tilting from extreme call prices to sort of more neutral. Does that make sense? Because we're in the middle of this graph. If we were all the way on the left then we would be skewed towards put prices. Does that make sense?

[Jack]

Yes.

[Brent Kachuba]

So it's a very weird thing that we're making new highs. But the board, now the options board is tilting and shifting. And if you think about the extreme price reaction we've had over the last week and month, right. Two weeks or whatever it is, they're up like 30%. That's a crazy rally. But the options market now the, the vols are shifting in such a way. You go something here seems a little bit weird and to me it suggests that or maybe due for like a more legitimate pause in silver. And again input flies, you can structure great risk reward. I, you know the one thing I would say here is that if you wanted to bet on silver going down, the last trade I think you should make would be short calls because silver could continue to go up even more in this type of environment. And so if you're short calls and silver goes up under 20% then that's the kind of thing where you get carried out on a stretcher. Right. You don't ever want to do that obviously. But in this case what we're seeing is the fact that these vols are changing suggests to me that we're getting in, in as a, as a full reference. SOV right now is trading. Sorry, I want to get a price quote so we can fact check ourselves next time here. Jack. So we're now trading 5619. That's S L V the ETF. So you know, we're watching this. I think it's a signal that volume could come down and we've discussed this with our members. If you subscribe to Spot Gamma you can look at our, our one by two trades that we have been suggesting here. But I just think it's an interesting kind of mark here and we could check, fact check this next time to say what did silver do? You know, did this signal prove that silver was due for a pause here? Because these options balls started to suggest that some positions were, were starting to adjust.

[Jack]

Yeah, it's interesting to look at this stuff in real time then to kind of come back the month later and say, all right, here was the setup we saw, like, what actually happens for, like, people like me. You don't know a lot about options. It's just interesting to see that and carry it forward to the actual result.

[Brent Kachuba]

And you see here is like December 1st to. So this is 10 days of history. So 1, 2, 3, 4, 5, we kind of got down here where vols were still elevated but neutral. Right. We're neutral in terms of call versus put position would suggest that people either sold their calls because they were long them, they sold them to make some money, or they shorted them. Right. So that just tells us the options market kind of like regulated. And just to see how that looks in terms of price action. Again, it's this period right here. If you look at December 1st and let me make sure this is a day trade. I just want to. I want to show how the. How the market sort of responded here. This is those five days, right. So 1, 2, 3, 4, 5 days of, you know, this is the consolidation where it turns out if you're a short volume this period, you actually made a little bit of money, you know, depending on how you structured. Exactly. But, you know, this wasn't this like, holy heck, you know, full mean reversion type scenario. Now you've added another 8 to 10% on silver prices. And so now you may get again, you could just get a 5 to 10% correction, which in terms of the overall trend is meaningless. But it does again highlight how you can use implied vols to help you navigate different price changes. Right. Both in an individual stock, but as well as in some assets or commodities. So even if you're not an option trader, you can use these options values, I think, to help you out and then back to the point of income and selling. If you're long SLV could be a great time to sell some calls against that. Right. Because those values are getting to be pretty rich. So that's the. That's Brent Silver corner for today. And we will have a new segment.

[Jack]

Prince Silver quarter at the end every time. I guess I won't be able to use the Silver will break JP Morgan thumbnail, unfortunately, I think he could.

[Brent Kachuba]

And then that would have been aggressive.

[Jack]

I had that thing of the thing at the beginning where you're like, actively presenting them. We have the picture at the beginning of the presentation. I was gonna have that there with you, like with your hand, and then silver will break GP Morgan some fire, but unfortunately you've taken the opposite side, so I'll have to go a different direction.

[Brent Kachuba]

Than that.

[Jack]

Well, anyway, as we wrap up here, people have gotten bad macro takes uninformed AI analysis and a bunch of informed options analysis. So hopefully everybody enjoyed it and thank you for joining us and we'll see you next time.

[Brent Kachuba]

Yeah, and thanks so much. Happy holidays to you, Jack. And it's been another year of doing the OPEX effect, so it's very exciting. Our Last one in 2025 and thanks to everyone who's watching these. We get a lot of great feedback, surprisingly, on them. And, and so yeah, we really appreciate.

[Jack]

It and like, and happy holidays to everybody. And it's pretty cool. I mean, we've been doing this for a long time now. I was looking at, I forget what it is, but I was looking at the episode count the other day and I'm like, you and I have been going at this now for a while.

[Brent Kachuba]

Yeah, it's true. And I debt a gratitude to you because you produce all this sort of stuff and your, your channel's growing quite a bit, so that's fun to see and, and hopefully you can keep it going for next year.

[Jack]

And a debt of gratitude to you for listening to my uninformed options analysis every month because I'm sure, I'm sure it's, I'm sure it's taxing on you.

[Brent Kachuba]

And you got to listen to my allegedly informed options analysis. So.

[Jack]

Well, thank everybody and happy holidays and we'll see you guys next month.

[Brent Kachuba]

Thank you for tuning in to this episode.

[Jack]

If you found this discussion interesting and valuable, please subscribe on your favorite audio.

[Brent Kachuba]

Platform or on YouTube. You can also follow all the podcasts in the Excess returns [e-mail] if you have any feedback or questions, you can.

[Jack]

Contact us@excess returnspodmail.com no information on this podcast should be construed as investment advice. Securities discussed in the podcast may be.

[Brent Kachuba]

Holdings of the firms of the hosts and Doug.

[Jack]

Here we have the Limu Emu in.

[Brent Kachuba]

Its natural habitat, helping people customize their car insurance and save hundreds with Liberty Mutual. Fascinating. It's accompanied by his natural ally, Doug.

[Jack]

Limu is that guy with the binoculars watching us.

[Brent Kachuba]

Cut the camera. They see us. Only pay for what you need@liberty mutual.com.

[Jack]

Liberty Liberty Liberty Liberty Savings Ferry Unwritten.

[Brent Kachuba]

By Liberty Mutual Insurance company and Affiliates.

[Jack]

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[Brent Kachuba]

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