The S&P 500 Index (^SPX) just closed with its eighth straight weekly gain — the longest streak since 2023. But underlying options positioning has changed meaningfully since March, observes Brent Kochuba, founder of SpotGamma.
Most importantly, the market has quietly shed much of the protective hedging that was in place just two months ago. With a dense macro calendar ahead, the market is becoming increasingly susceptible to a short-term volatility event.
(Editor’s Note: Brent is speaking at the 2026 MoneyShow Masters Symposium Las Vegas, set for July 19-22. Click HERE to register.)
Last week’s earnings reaction in Nvidia Corp. (NVDA) offered a good example of how fragile positioning can create unexpected price action. Despite delivering a 6% earnings beat, Nvidia fell nearly 5% from its highs by Friday. The move still remained within the stock’s implied options range of plus-or-minus-5.5%, but expectations had become extremely elevated due to heavy call buying ahead of earnings.
Zooming out to the index level, current positioning appears somewhat similar to Nvidia’s setup before earnings. The market remains heavily tilted toward upside call exposure, while downside hedging activity has thinned considerably from just two months ago.
Risk reversal data shows strong demand for upside exposure and “risk-on” positioning, with S&P 500 call skew sitting near the 96th percentile versus the prior year. Put skew rests at just the 4th percentile. In this extreme index position, any profit-taking or positioning unwind could trigger accelerated movement.
