Gamma Squeeze The World

Submitted by QTR's Fringe Finance

A little over a week ago, I wrote about Leopold Aschenbrenner returning to markets, and the ensuing nausea the entire spectacle caused me.

For those who missed it, Aschenbrenner’s Situational Awareness fund had grown to roughly $45 billion before getting absolutely smoked in July, falling toward $10 billion and forcing the liquidation of most of its public equity portfolio to Darth Griffin over at Citadel. Then, barely six weeks later, CNBC reported that Situational Awareness was back, this time buying options tied to AMD, Bloom Energy, CoreWeave, SK Hynix, SanDisk and the Roundhill Memory ETF.

The media slobbered over these options buys like it wasn’t the exact same thing a million 19 year olds do on their Robinhood app and post to r/WallStreetBets every day.

In my piece, I noted that maybe Aschenbrenner really is brilliant about AI, but understanding scaling laws and compute doesn’t automatically make somebody a great portfolio manager. His previous strategy looked to me like nothing more than an enormously concentrated, leveraged bet on the hottest momentum trade on Earth, one that generated spectacular returns right up until it imploded into itself like a dying star.

Today let’s add another piece to the puzzle. For years I’ve argued that the modern stock market increasingly resembles a gigantic mechanical contraption driven primarily by passive flows, options positioning, dealer hedging and gamma. The marginal price of a stock isn’t necessarily being set by some guy with a green visor carefully discounting the next 20 years of cash flows.

Increasingly, instead, it can be set by flows interacting with flows interacting with algorithms, while CNBC brings on an analyst afterward to explain why it was actually because Jensen Huang signed some nubile Taiwanese woman’s tit at a tech conference in Asia that week...(READ THIS FULL ARTICLE 100% FREE HERE).