It Only Happens at Bottoms | Andy Constan on the Options Extreme That Showed Up at the Highs
About this episode
Andy Constan discusses the implications of the options market on the AI and semiconductor sectors and the potential risks ahead.
On the Latest First Principles, Andy Constan explains what the options market is signaling about the AI and semiconductor boom, why he believes earnings expectations have outrun the size of the economy, and where the next risks may emerge. We discuss speculative call buying, single-stock volatility, AI capital spending, consumer dissaving, the Fed put, Kevin Warsh's monetary policy framework, and the looming reset of US tariffs.Topics covered: * Why parabolic moves in AI infrastructure and semiconductor stocks may reflect a speculative bubble * What rising single-stock volatility and unusually low market correlations reveal beneath a calm index * Why out-of-the-money calls became more expensive than puts and what that says about investor positioning * How investors can hedge concentrated stock gains by selling calls and buying protective puts * Why the AI bubble may be hiding in earnings expectations rather than traditional valuation multiples * Andy's economic pie framework and why projected corporate profits may exceed the GDP available to support them * How AI competition, open-source models, job displacement and subsidized token usage affect the return on AI investment * Why…
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