Robinhood CIO EXPLAINS why market swings have become so extreme

I DO KNOW IF THERE'S INFUSING OR CONTRADICTORY MARKET, THINK ABOUT THIS, SESSIONS THAT HAVE MORE WINNERS ARE DOWN DAYS. UPDATES WE HAVE MORE DECLINERS, IT'S CRAZY AND THEN OF COURSE THERE ARE DAYS WITH TECHNOLOGY POPPING BIG TIME, I FEEL LIKE WE ARE ON OUR WAY AND THE NEXT THING, IT IS STABLES OUTPERFORMING. MY NEXT GUEST HAS AN EXPLANATION FOR WHAT'S HAPPENING HERE. CIO OF ROBIN HOOD MARKETS AND FIRST, LET'S TALK ABOUT THIS CONCEPT EURO ABOUT WITH DELTA. >> DELTA IS A MEASURE FOR AN OPTION, HOWEVER MUCH A STOCK PRICE MOVES DETERMINES THE OFTEN PRICE. THEY DETERMINE THE AMPLIFICATION OF THAT SO GAMMA RISES, THAT MEANS OPTION PRICES WILL MOVE MORE AND ESSENTIALLY WHAT WE SEE HERE, THE GAS. IT MAKES THE MARKET MOVE EVEN MORE. >> IT DOESN'T WORK TO THE UPSIDE AND DOWNSIDE? >> IT DOES NOT THOSE GAMMA WHEEZES WERE PHENOMENAL. >> AMAZING BECAUSE IT MEANS NATURAL BUYING IS TO HAPPEN MORE WHEN THINGS MOVE HIGHER BUT WHEN THEY GO DOWN, IT MEANS THERE'S EXTRA SELLING UNFORTUNATELY. >> THIS TAKES US TO WHAT YOU.OR CALLED THE AMPLIFIER LOOP. EXPLAIN THIS, WALK US THROUGH THIS. >> RIGHT NOW YOU HAVE A LOT, MORE THAN 60%, AROUND 60% OF OPTIONS IN THE S&P 500, ZERO DAYS TO EXPIRATION SO THAT MEANS NATURALLY IS MORE GAMMA IN THE MARKET BECAUSE THEY CAN LOOK QUICKLY SO THAT CREATES A LOT WHICH MEANS WHEN THINGS GO WRONG, THEY GET AMPLIFIED AND IT'S GOING TO 180 BILLION SO WHEN YOU HAVE A AND THINGS ARE NOT WORKING, THEY HAVE TO SELL IN THE AMPLIFICATIONS AND THEY BORROW MONEY BECAUSE THERE'S HEDGE FUNDS IT CREATES A LOOP. >> IS IT A CONTROLLED LOOP? YOU CAN SEE IT GOING OFF THE RAILS, SO TO SPEAK. >> I THINK IT'S WORSE UNTIL IT WASHES OUT. I DO THINK WE ARE CLOSE TO WASHING OUT, I KNOW IF WE ARE COMPLETELY DONE, BUT WE ARE CLOSE AND WE SEE CUSTOMERS STEP INTO THIS DIP. >> EARNINGS OF ARE GIVEN A LOT OF OPPORTUNITIES AS WELL BECAUSE SECOND-QUARTER EARNINGS, I DON'T WHY THEY ARE SO THAT BUT THIS IS EVEN WORSE THAN NORMAL. SO FAR, IF YOU MISS, YOUR DOWN 9%. HISTORICALLY IS DOWN 3%. THAT'S TOUGH EVEN IF YOU BE, YOUR DOWN. >> EXPECTATIONS ARE REALLY HI. EARNINGS GROWTH EXPECTATIONS HAVE GROWN BY 50% SINCE END OF MARCH SO JUST IN THE LAST QUARTER. FOR THE ENTIRE 2026 YEAR END THIS QUARTER AS WELL SO IT'S SOMETHING WHEN EXPECTATIONS ARE HIGHER, THAT MEANS IT'S ALREADY IN THE PRICE AND ONE LITTLE THING WRONG CAN MAKE IT DISAPPOINTING. >> WHAT YOU THINK WILL STAND OUT THE MOST THIS WEEK? IS A GOOGLE? >> GOOGLE FOR SHEER SIZE AND INTEL WILL BE CLOSELY WATCHED BECAUSE THE EXPECTATIONS HAVE SHOT UP IN THE LAST QUARTER BUT THERE'S A LOT OF INTERESTING ONES THIS WEEK. >> LET'S TALK ABOUT THIS ONE, K-3 KICKED UP A HORNETS NEST. YOU WROTE YOUR THOUGHTS ON OPEN SOURCE, THIS IS A TERM USED A LOT AND I'M NOT SURE EVERYONE UNDERSTANDS THIS SO 1865, OBSERVED IT'S ABOUT THE INDUSTRIALIZATION THE CONCEPTION, MORE EFFICIENT STEAM ENGINES BECAME AND IT LED TO A DECLINE AND CONSUMPTION LED TO INCREASE IN CONSUMPTION AND THIS IS THE PARADOX AND YOU CAN APPLY FOR THE 1865 RAILS TO WHAT'S HAPPENING IN A I. >> IT HAPPENED WITH ELECTRICITY, TOO. WITH AI YOU CAN HAVE MORE EFFICIENCY AND IT CREATES LESS USE LIKE POWER AND COMPUTE, BUT MORE USE CASES ARE CREATED AND THEN I THINK THAT'S WHAT WILL HAPPEN, THINGS WE CAN'T EVEN IMAGINE WILL HAPPEN. >> THE BOTTOM LINE IS THESE THINGS GET CHEAPER, MORE MONEY CAN BE SPENT OVERALL AND THAT'S A GREAT OPPORTUNITY FOR INVESTORS. >> IT CREATES AIR POCKETS. >> YOU SAY THE PHYSICAL LAYER, AHEAD OF VOLATILITY, YOU STILL HAVE EXPOSURE TO AI. >> WE DO, WHO ARE VERY FOCUSED AND DECIDED IN JUNE TO TAKE A BIT OF PROFIT AND START HAVING MORE BALANCE LOOKING AT WHAT BEYOND THE PHYSICAL AREA OF AI CAN BENEFIT FROM THIS GROWTH AND THAT CAN MEAN THINGS LIKE SHOP BY OR VISA BECAUSE OF A STABLE COIN CONNECTION SO THERE'S INTERESTING THINGS BUT WE ARE NOT WALKING AWAY FROM THAT BUT THAT WILL STILL BE NEEDED. >> INVESTORS, I THOUGHT THIS WAS INTRIGUING, DO WE HAVE THAT BY? >> IT'S ACTUALLY THE OTHER WAY. OUR CUSTOMERS ARE BUYING THE DIP ON MICRON AND SPACEX AND MAKING SALES. >> A LOT OF FOLKS ARE SAYING THERE WILL BE INFLECTIONS FOR HYPER SCALARS AND FREE CASH FLOW, IT WILL REBOUND AND MAKE IT A YEAR OR TWO WILL BE GREATER THAN EVER, DO YOU ANTICIPATE SOMETHING LIKE THAT? >> THAT'S THE HOPE AND I THINK THAT'S WHAT THEY ARE BETTING ON. I THINK IT IS A LITTLE BIT, IT'S INTERESTING BECAUSE SENTIMENT EXPECTATIONS ARE EVERYTHING AND IT GOT PRETTY LOW AND THEY CAN SELL COMPUTE WHILE DOING THIS AND THAT'S