Semiconductor options pricing indicates short-term exhaustion
The short-term bullish momentum in semiconductor and tech stocks is reaching exhaustion as implied volatility hits extreme levels and traders begin monetizing call options.
The argument
The guest argued that the rate of change in leading sectors like semis and DRAM is unsustainable, with QQQ pricing in wild daily moves. A shift in options positioning toward the put side suggests traders are selling rich calls to monetize the high implied volatility, signaling an impending consolidation or pullback.
The thesis, stress-tested
✓ What validates it
- ✓Implied volatility for SMH and DRAM-related equities contracting
- ✓Semiconductor stocks consolidating or correcting through the July options expiration
▸ Risks discussed
- ▸Further blowout earnings or upward guidance revisions from key chipmakers
- ▸Persistent retail meme-stock behavior driving irrational upside
Hear it yourself
"QQQ has been pricing in or has been experiencing 2% daily moves, which is pretty wild compared to the S and P, which has been seeing something like 1% moves. Right? So the relationship between these two indexes is hugely different. The other one is here semis, which is obviously leading sector, and then the DRAM component."
00:00 / 00:19
AFFILIATE LINK · ZORTIX MAY EARN A COMMISSION · NEVER A RECOMMENDATION TO TRADE