Brent Kochuba Says Volatility Is Now Releasing to the Upside

joining the show, the gamma guy himself, Brandt. How you doing, man? >> I'm doing amazing. How are you guys doing? >> Fantastic. >> Great. Doing great. >> Fantastic. >> It's uh yeah, quite a day today. Um in the upside volatility, I think we were talking about this a little bit last week. We were talking about cheap tech, how NDX seemed a little bit uh I don't want to say underpriced just seemed like a great target because we saw so much universities off of June and July highs. Remember, the dispersion index was at all-time highs. Um, and there was such a chasm between NDX or NASDAQ ball and S&P volume and all that corrected into August and September. And now, you know, with the market not wanting to go down with higher oil prices and higher rates and all that sort of stuff, as soon as it gets some good news, we're seeing volatility released to the upside. Uh, we were just talking about this with our members this morning that if you look at it, actually, the upside volatility of the NASDAQ and the S&P is both higher on up days than it is on down days. uh which is a pretty kind of remarkable statement and something that you know is not normal. And so you know I think we're starting to see that uh reemergence of the bullish leg pick up. We saw the situational awareness guys buying a bunch of flex options last week. Uh so that's getting the bulls back into that sort of space. You got the midterms coming up. You got oil down substantially. And so you know right now the bulls kind of got them where they want them. And uh and I I think you can start to see the the manium the the mania reflexive sort of behavior of market sort of pick up here because people don't want to miss a rally particularly in a quarter end which is only nine days away. Uh you don't want to mess up your quarterly performance by you know not not have enough long exposure. So uh quite quite a day for bulls and I think again true to what we were talking about last week is the the core call was I think realized volatility is going to start to move out of the big OPEX on Friday. we're starting to see that realized ball pick up now, right? Um and so, you know, the the pieces are kind of coming together here at the moment. Oil stays in its box, then then I think, you know, we should continue to want to press that upside um into the election. >> Hold on. Um you said something and it was quick, but it's I think it's important to talk about that data point a little bit. I hear those things these days. I actually I mean I've been around for 20 years. I don't really care as much because I'm like, "Yeah, duh. I I I'm interested already. I'm already long these tech names." But you said something about the situational awareness guy uh buying something last week. What did he buy specifically if you're aware of it? And and what does that make you think when he buys that? What do you think when you hear that? >> Well, there's been a bunch of of calls that fit his profile particularly trading in flex options. And if you're trading flex options, you know, in size, you're an institutional investor obviously, you know, it's not uh retail people kind of picking away. uh but there was a lot of uh iron NBIS uh were two particularly were two names in particular that picked up. Um I'm also seeing that similar kind of call buying in just the NASDAQ itself. The QQQ had some pretty big flex trades go up. You see uh Nvidia, Apple, so some of those more common names. Uh but it was specifically some of those names NBIS and Iron in particular caught my uh caught my attention here and and was were being discussed on X um in regards to you know uh situational like flows that are getting picked up and that's just kind of in the last week there's signs that he's been active over the last kind of two three weeks maybe and so you know people start talking about that guy seen him reloading it's funny because everyone's dunking on him on the way down and and sort of saying how could you give a 20-year-old money but then when he starts buying calls again everyone's like oh I got to buy these calls too right so uh His signal remains strong in the in the force. I guess there's some there's some sort of Star Wars analogy there. >> I think that was perfect. Yeah, signal remains strong in the force. Um, we just don't know if he's on the dark side yet or not. But, uh, >> AI is the dark side of >> U. Yeah, we're seeing a lot of big moves, but notably crypto. It's kind of that the classic like the market just moves in the complete opposite direction than you would think after the Clarity Act failed. Uh but like we were talking about earlier, the clarity act failing was much more about stablecoin than Bitcoin itself. Uh but crazy to see Bitcoin up at almost 86K, first time breaking above 83K uh since January of this year. >> Yeah, you can't you can't deny that uh upside. And and interesting if you looked at SKs, I haven't checked in the last day or two, so these things can change quickly, but there's not much of a call skew at all in Bitcoin. And the V is pretty cheap. And so cheap meaning IV ranks were, I think, sub 10. >> And so, you know, betting on that upside, you know, regardless of what you think of Bitcoin as an asset. Uh, I think I've said this before with you guys, but I worked with a a trader once who said sometimes you just buy the options because they're cheap. And, you know, this may be one of those kind of situations. Um, I I don't particularly believe much in in Bitcoin, and you can leave the comments and uh sign them to Jamal. If you don't like that statement, that's fine. Um, but you know, at the end of the day, you want to trade where the price action is kind of getting squeezy, right? And I and and Bitcoin, that chart looks good. The ball was kind of cheap, which tells me that there's room for a call buying. Um, I think a lot of times when you see a stock that has, let's say, a heavy call skew and an IV rank of like 90, that's a sign that often times a move is kind of getting exhausted. And so, you know, this this looks kind of nice. The other thing I thought was funny about this is that I think a lot of times I put Bitcoin and gold in the same bucket as like an alternative asset. uh or maybe part of like the you know the the demonetization or uh you know the loss of currency purchasing power. >> I mean yeah they're not interesting assets right? >> Yeah and gold is actually down today and that I think is really pretty surprising down like kind of 1%. Now one day doesn't make a whole trend but it's interesting that these two things are kind of moving uh in opposite of each other and so um anyways the the point to bring it all back is yes bitcoin is breaking up despite the legislation that kind of went against it. Uh, and I think that's a strong signal and options are cheap and so rather than trying to buy Bitcoin and getting rugpulled, I think you can buy, you know, one month, two month, 25 delta call, something like that and and use that to express upside because it gives you some nice fixed risk if you are interested in playing that breakout. >> I can't believe you're not interested in trading these options on like I bid and some of these other Bitcoin products. The gamma guy himself who loves GEX, are you serious? You're not interested at all? Nothing in like micro strategies or like coin? Uh I wrote a lot about Micro Strategy and the thing with Micro Strategy in particular is they sold calls against their Bitcoin holdings and you know they packaged them these convertible bonds and they basically launder their volatility. That was part of his whole pitch, right? I'm going to capture the volatility of Micro Strategy, use that to buy Bitcoin and as Bitcoin goes up, you know, it's a I don't I don't want to use the word scheme. Uh it's a it's a plan um of sorts. And what happened is they he crushed his own vault, right? And so he started to, you know, in a lot of ways underperform Bitcoin. Now, if Bitcoin goes up 50% or whatever in a month, he's going to look like king of the world again. Um, but what happened was his ball got so smashed that he had to turn to alternative uh, you know, methods of of financing himself, right? Uh, and these are the the perpetuals and things that he's starting to get into. And so, you know, that thing is a real zombie. now higher Bitcoin prices makes that thing go away. But, you know, he laundered his own vault and and to me, you know, I don't think Micro Strategy offers a great deal now because if it starts to rally, he's just going to sell more V. And so, I I just I I I'd stay away from that. And I think I learned a while ago as a trader, you know, it's not like there's a shortage of ideas in the US equity space right now. Um, oil I don't really understand, you know, gold I don't really understand. clearly crypto one minute I think I understand it and the next minute you know you don't and there's legislation those other things so I tend to just stay in my lane and I like to stay in my lane uh because there's still a lot of opportunity now if realized ball in the S&P goes to a six and we're all just staring at the ball like well you know a board trader is kind of the worst trader that tends to be what happens right then I'm going to go trade Bitcoin or something just because equity ball is so dull but right now things are moving um and and so you know I know this isn't the exciting kind of content you all want I hear, but I I tend to I I stay in my lane, I guess, is what I'm trying to say. >> Well, I think that's that's a signal in itself. If we hear you on the show saying, "Check out this setup at Micro Strategy," we're going to be like, "Oh, we're not off the platform. It's over." >> Yeah. I'm going to be so nervous. >> Now, if you're going to put if you're going to give like, you know, 900 volic strategy again, you know, I I'll I'll wake back up, right? But, um, and to this point, wanting upside exposure in Bitcoin and saying the options are cheap. Well, you know, okay. Like I have absolutely no problem saying that that looks like a good idea, but I tend to not traffic in that space, you know, a whole lot again just because things are looking so good on the equity space and there's so much to trade. >> Fair enough. >> Yeah. No, for sure. I hear you. >> Um, yeah, we've got a number of positions in some of these other products like Intel having a big move today to the upside and this was another one that had decent implied volatility, not super low, but uh they have earnings coming up in about a month. So, that'll be interesting to see what happens there. But these these products have been super volatile. Uh, and even even though we've had elevated V, the most recent low in Intel specifically was like 57% 58%. And into this rally, you're seeing IV increase. So that's kind of that the nice uh position where if you're buying a call maybe like we like to sell a put or sell a put spread to buy a call or call spread and you can really benefit from that upside move if it's paired with the vault increase as well. I did a diagonal in this one and Brent uh you should know like you I think I told you this. I mean it was you and Kevin um about two weeks ago kind of the same week talking about how much in the the a lot of the tech ball has come off and we could see that that move and not only um the move to the upside but possibly move up in too. So yeah, I put on the diagonal here. I was like yeah that's that's kind of what I feel like too. That's a good idea putting the diagonal on here and thus worked out well. Yeah, and I think that tech ball, you know, the the more these stocks rally, if this rally can continue, the more the chase is on. And I don't know that we're going to have a move like we did in in March and April and and you know, May where the you know, dispersion index hit again alltime highs while these stocks were because these stocks were rallying. But man alive, you know, these walls were cheap and now they're starting to rich as you as you just sort of uh outlined. The interesting thing here too is that a lot of these stocks you could argue diluted in some form, right? Like Intel sold shares, the mags were all selling, you know, debt and all this stuff a couple of months ago, remember? And so, you know, these stocks are starting to rerally past this point where they arguably monetized some of that upside. Um, and so I think that's something that's, you know, really, really quite interesting here. Uh, but, you know, at the end of the day, I don't know how much fundamentals matter in a move. You know, when you start to see these moves set up like this, it becomes again back to the reflexive nature of things where, hey, I got to buy this because everything is going up at five, six, seven percent. And I think that can press into a quarter end like this. You know, that's a important dynamic. And then no one wants to short Trump into midterms or, you know, or or Trump Trump's alleged desire to get stocks to go up. And every time I think that sounds like a ridiculous idea, he quotes how, you know, stocks are back up today, right? Or whatever. So, I just think that, you know, um you want to park your assumptions about fundamentals, say, "Hey, these are cheap upside calls almost to the point of the Bitcoin thing, and you know, we got to get long this stuff in case the market rallies hard." And if you're wrong buying cheap calls, well, that's a lot as painful than, you know, levering it up into some uh stock or something like that, right? So, I I just think it it made a lot of sense. I think some of these names, you look at AMD up 9% today. Okay, that vault is probably not as cheap as it was uh late last week when we're first talking about it. But I still think there's, you know, vectors of opportunity in there. Uh and some, you know, some ideas you can uh ring out on on tech upside. >> For sure. It would seem that way. Uh well, we got a very busy post expiration Monday happening here. Up 65.5 in the E- mini S&Ps to 778. Big moves here. But Brent, thanks for joining the show, man. You can catch Brent on the show Mondays and Thursdays at 9:00 a.m. and then catch him on Gamma Guy as well. Uh he'll be there giving you the raw hard facts about markets and volatility all over the place. So Brent Kachuba joining the show. Thanks, man. Good to see you. >> All right. Likewise. >> Um yeah. Well, strong strong moves here. Strong moves here. >> Crazy. >> And it does seem like it's continuing. As we said, you get to that 9:00 a.m. to 9:30 a.m. Central time. Markets are at at at highs right now of the morning. They've been positive since we opened on Sunday and they're just motoring higher here. But uh we're going to take um we're wait is it time for a break? >> I don't even know what the hell am I think so it might be. >> Why not? >> No. No, it should be. >> Sure. Well, we're going to take a quick little break. We're going to take a quick 90 second break. Maybe I need a break. Maybe that's going to take a quick 90 second break. We'll be right back on the other side. You're watching Tasty Live.