Live Take and Election Positioning | Brent Kochuba & Mat Cashman from OCC

Equity markets currently exhibit a disconnect between suppressed volatility and mounting macro risks, including rising interest rates and geopolitical instability. While the VIX remains low, the bond market’s MOVE index signals significant underlying stress, suggesting equity traders are currently ignoring broader cross-asset volatility. Election-related positioning shows minimal hedging, with some unexpected bullish skew in post-election options. Given that short-dated index options are serially underpriced relative to realized volatility, selling index volatility is currently ineffective. Instead, traders should focus on single-stock opportunities or skew-based strategies, such as broken-wing butterflies, to capture value. The market’s persistent "someone else's problem" attitude toward credit and rate risks creates a fragile environment where a sudden shift in sentiment could trigger a violent repricing of equity volatility.