A parenthesis about today

Options

There is a chart called something like “options price structure,” which shows how the pricing structure of options on “QQQ” (the Nasdaq 100 ETF, where SpaceX debuted today) is changing.

In this context, there is the so‑called put skew. Normally, put options trade at a higher price (they are more expensive) than call options. This is easy to understand: investors pay a premium (a higher value) for protection against declines, which is precisely the role of puts.

On the other hand, there is the so‑called call skew. Unlike put skew, when call options start trading at a higher value (more expensive) than puts, it indicates that the market is willing to pay more for upside exposure (there is bullish sentiment).

Today there is clearly a significant drop in put skew and a rise in call skew (at least when looking at options out to 2028). In other words, there is less demand for protection, because investors are less worried about declines, so puts become cheaper compared to calls. There is greater demand for bullish bets, as seen in calls, which become more expensive due to increased interest in capturing gains.

In practical terms, this reflects extreme optimism. The market is more willing to pay for upside than for protection. Everyone is very bullish. Whether the rally continues or this is a sign of exuberance, when protection is neglected and bullish bets surge, the risk of a correction increases. And the correction can be very fast.

Graphic.

SPX Volumes

Then we have the correlation of the S&P 500 (SPX), but in terms of volumes. This means we can compare the weighted average volume of the individual stocks with the volume of the entire index. In other words, we compare the volumes of an element of the index with the volume of the index to which that element belongs.

If the stocks in the index move in a correlated way (all rising at the same time, or all falling at the same time), the index volume will reflect the aggregate well. But if the stocks diversify — that is, they move in different directions, with some rising while others fall on the same day — the index volume decreases relative to the total volume of all the index components.

Therefore, when the index volume is lower, we are in a basket of stocks moving in different directions, reducing correlation. In practical terms, the index is diversifying internally, since its different components offset each other and do not concentrate all the flow. If correlation is low, the index may appear day to day as if it is moving in a single direction (upward), even though, when reviewing component by component, there are significant movements.

And here’s the interesting part: the volume differential is a way to see dispersion. High dispersion shows up as lower correlation among the components, which creates more opportunities for stock pickers. Conversely, in a low-dispersion environment with high correlation (which is not the current scenario), the index would faithfully reflect the aggregate movement.

Today, the SPX shows clear independence among its components, suggesting lower correlation and greater diversification within the index. This is important — a large market for hedge funds seeking to select assets.

Graphic.

Two, from other risks

Both in options and in index volume, there are what we might call tensions. The question is whether this can be reversed, how quickly that reversal might happen, and what the limit is. No one should be able to answer this with full certainty, but some risks can be projected.

Circular financing contracts

The underlying logic behind all this — the bullish narrative, the explanation for everything above — which involves letting the price of some companies fall compared to buying others (artificial intelligence), is that a few firms will outperform the rest, increasing their weight. For every dollar AI companies earn, it is a dollar lost by other firms. A small group of companies will beat the rest, or at least this handful of companies deserve our money much more than the others.

This has several problems, but it helps us highlight the following. One risk we may be facing is what was recently discussed about circular revenues, similar to what happened in the 1990s (Company A buys ads on Company B’s website, then B uses that revenue to buy servers/software from Company C, and then C buys ads on A’s site). Everyone records revenue, growth numbers look excellent, valuations rise, but no net new money enters the system from external customers. This deserves research, but the thesis cannot be denied or accepted a priori.

Unlocking IPOs and debt issuance

Another element, again comparing to the 1990s phenomenon, could be IPOs. The year 2000 has similarities with today, in the sense that the bear market of 2001–2002 was a consequence of the IPOs of 1999 and 2000. Part of the problem then was the lock-up expirations: investors who initially could not sell (large holders with many shares) were able to do so once the prospectus period (part of the subscription and sale contract of the IPO) expired.

This brings two conditions we cannot assert will happen: (i) the lock-up market is important (Anthropic and OpenAI still have no public prospectuses), and (ii) investors will come out to sell.

For example, SpaceX has lock-ups of 180 and even 360 days. This prevents large volumes of shares from entering the market.

When lock-ups expired in 2000 and the following years, there was an endless cascade of sales.

Planned IPOs could represent 5% or 6% of market capitalization. But even so, there is still bullish sentiment. One possible explanation is the withdrawal of 2% or 3% of market capitalization each year through share buybacks carried out by companies. And the reversal could be the following: this will be completely offset, either through debt (bonds issued, e.g., Google) or through lock‑ups expiring (e.g., SpaceX). That could lead to significant new share offerings or a major reduction in available capital in the market. As a result, companies would be reducing buybacks, especially given the heavy capital commitments by the hyperscalers.

Conclusion

These are hypotheses, nothing more. But it is possible to think that the current configuration feels very unusual. There are signs of extreme bullishness showing up in options with low‑cost put skew, risk reversals, and implicit correlations, but bearish factors are also widely known, especially in the U.S. market — including IPO issuance itself, midterm elections, and elevated bond yields.

Current prices should already discount the fact that everyone is aware of these factors. It is difficult to know what the most contrarian stance is right now — being bullish or bearish. The data so far suggest that the bullish position is the consensus.