Big Decline. Options Support Gone | Brent Kochuba on the Fragile Market Setup

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Mar 21, 2026

Brent Kochuba, options market specialist and founder of SpotGamma, explains why calm markets hide rising volatility risk. He breaks down put-heavy positioning, market maker hedging, OPEX turning points, and how geopolitical and credit pressures could trigger a sharp vol spike or price move. Short-term flow dynamics and the JP Morgan collar’s sticky levels get special attention.

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ADVICE

Use Longer Dated Hedges For Geopolitical Risk

Avoid relying on zero DTE hedges during geopolitical or credit 'known unknowns' because timing is unpredictable and zero DTE can't cover multi-day risks.
Brent says traders shift to one- to three-month puts or VIX calls for meaningful protection in these scenarios.

INSIGHT

Quarterly OPEX Is Put Heavy And Market Moving

The current March quarterly OPEX is large and relatively put-heavy across indices and single stocks, shifting the market from stock-picking to asset allocation decisions.
Brent highlights SPX/ETF delta notional dominance, making index hedges especially influential.

ADVICE

Roll Puts Conservatively To Maintain Protection

If you close expiring puts you typically roll down-and-out; but with elevated tail risk you may roll only slightly down to maintain sensitivity, keeping hedge pressure persistent.
Brent recommends rolling shorter protection into nearer-ATM monthlies rather than far wingy puts in this environment.

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This episode breaks down the growing tension beneath the surface of today’s markets, where volatility signals, options positioning, and macro risks like war and inflation are increasingly misaligned. Brent Kochuba and Jack Forehand explain why markets appear calm despite heavy hedging, and what that disconnect could mean for a potential volatility spike and downside move ahead.

Brent Kochuba on Twitter
https://twitter.com/SpotGamma

SpotGamma Website
https://spotgamma.com

Topics covered in this episode

• Why volatility looks elevated beneath the surface even as markets remain relatively calm
• The growing gap between implied volatility VIX and realized volatility and what it signals
• How options expiration OPEX can create turning points in both price and volatility
• Why current positioning is unusually put-heavy and what that means for downside risk
• The role of market makers and hedging flows in driving market moves
• How geopolitical risks like the Iran conflict are changing options behavior and hedging demand
• Why correlation is spiking and what it says about investors moving from stock picking to asset allocation
• The breakdown of traditional diversification including the 60/40 portfolio
• How credit markets and liquidity risks could amplify equity volatility
• The impact of zero DTE options and why traders are shifting to longer-duration hedges
• The significance of the JP Morgan collar trade and key levels to watch into month-end
• Why volatility spikes often follow periods of suppressed market movement
• The potential for a sharp upside rally if geopolitical risks suddenly resolve
• How options positioning can help both traders and long-term investors with timing decisions

Timestamps

00:00 Volatility premium vs low market movement disconnect
01:00 Why markets feel calm despite rising risks
05:20 Explosion in options volume and impact of Monday Wednesday Friday expirations
07:00 How market maker hedging flows drive price movements
08:40 Dynamic hedging and why options impact evolves over time
09:20 Why OPEX can trigger market turning points
10:30 VIX expiration effects and short-term volatility suppression
13:00 Negative gamma and how it amplifies market volatility
14:10 Why hedging demand remains high despite OPEX clearing
16:00 Jump risk scenario and potential VIX spike to 40
17:10 Shift from zero DTE trading to longer-term hedging
18:00 Put-heavy positioning across equities and indices
20:40 Size and significance of the current OPEX event
22:20 VIX spike dynamics around expiration
23:40 JP Morgan collar trade and key SPX levels
25:00 Why OPEX often marks short-term market lows or highs
28:30 Review of prior OPEX signals and market setup
30:00 Rising correlation and shift to asset allocation mindset
32:00 Dispersion breakdown and implications for equities
34:00 Software sector volatility and AI disruption narrative
36:30 Using options signals for better timing decisions
39:00 Correlation spike and risk-off behavior across markets
41:30 Why investors are avoiding calls and piling into puts
44:30 Cross-asset correlation breakdown and bond hedge failure
48:00 Credit market risks and spillover into equities
49:00 Extreme VIX vs realized volatility spread
50:50 Why realized volatility remains unusually low
52:30 Oil, inflation, and macro feedback loops