Brent Kochuba, founder of SpotGamma, joined CNBC’s Options Action Live to cover the post-election drop in implied volatility across tech, why put skew stayed rich while call skew cheapened, and the structures that pricing opened up in NVIDIA and Qualcomm.
Equities rallied after the midterm elections, crude oil fell roughly 9% on the session, and the VIX traded below 17 as the market released the risk it had previously priced in. Brent Kochuba, founder of SpotGamma, joined CNBC’s Options Action Live to walk through what that reset did to options pricing across tech names.
Vol Came Out Of Tech Once Catalysts Cleared
Implied volatility trades as an asset class of its own, and it repriced sharply once the election and a heavy earnings week sat behind the market. Fixed-strike implied volatility, measured at a constant strike rather than at the money and tracked in SpotGamma’s Volatility Dashboard matrix, fell by roughly 10 to 15 points in SMH, the semiconductor ETF, while short-dated vol in the Nasdaq-100 came in about six or seven points. Traders who were short premium collected on that move without needing direction, because the market lowered the price it charges to carry risk.
CoreWeave fell about 11% on the day and SMH broke below its July lows even as implied vol kept coming in, which suggests risk was taken out of the options pricing, but not out of the underlying names.
Put Skew Held Rich, Call Skew Cheapened
Skew compares what traders pay for downside puts against what they pay for upside calls. In NVIDIA, IV rank sat elevated ahead of the November 17 report, which is ordinary into an event, though the split between the two sides stands out more. Put skew ranked around 70 while call skew ranked around 10, leaving downside protection near the top of its range and upside calls near the bottom.
The asymmetry follows from recent experience, since after sharp post-earnings drops in names such as Alphabet and Intel, more traders are conditioned to hedge the downside into these events, and that demand keeps puts bid while relatively few participants pay up for upside convexity.
Selling Rich Puts To Buy Cheap Upside
That pricing is what makes a risk reversal workable without laying out premium. Brent walked through a January structure in NVIDIA that sells the 150 or 160 puts to finance the 240 or 250 calls for roughly even money, a position built to gain as the broader market recovers into year-end rather than one that needs the earnings reaction itself to break a particular way. The financing is not free, since a short put leaves the trader long stock at that strike if price trades through it, so the structure carries equity-like downside.
Qualcomm: Trading The Skew, Not The Direction
Qualcomm carried both high implied volatility and unusually high put skew into its report, partly because the stock has fallen after seven of its past eight quarterly reports and traders have paid up for puts accordingly. Brent walked through a put one-by-two for early December, buying the 135 put and selling two of the 100 puts for even money or a credit, with no fundamental view of the company attached. The position is short vega, so it gains as implied volatility drains after the event, the IV crush that tends to follow a known catalyst, and the modelled loss zone begins only below 65, which would take a decline of more than half.
What Would Confirm The Read?
We encourage traders to watch two things from here. The first is whether elevated implied volatility in NVIDIA drains after the November 17 report, since the short-vega side of these structures depends on that happening rather than on the stock’s direction. The second is whether put skew compresses toward call skew across the semis as tech stabilises, and a potential Anthropic IPO in the coming weeks is the kind of event that can keep short-dated downside bid and hold that gap open.
Watch the full segment on CNBC.
Brent Kochuba founded SpotGamma and appears on CNBC. He was previously a portfolio manager at Seven North Capital Management, building options-based strategies, and a derivatives broker at Wolverine Execution, Credit Suisse and Bank of America.
Options Action Live streams Wednesdays at 1:30 p.m. CT on CNBC.com.