Top Traders Unplugged

SI379: The Illusion of Safety in a Fully Invested Market ft. Cem Karsan

14 snips
Dec 20, 2025
Guest
Cem Karsan
Cem Karsan, a renowned options and macro strategist famous for his insights into market volatility and structure, discusses the hidden fragility in today's bullish market. He highlights how record low cash levels can mask significant risks and explains why the VIX may not be a reliable measure of fear. Cem also critiques traditional 60/40 portfolio strategies, advocating for a more nuanced approach to risk management that includes tail exposure and non-correlated assets. The conversation explores the impact of geopolitical factors and generational shifts on market dynamics.
Ask episode
AI Snips
Chapters
Transcript
Episode notes
INSIGHT

All-In Positioning Raises Fragility

  • Markets show extreme bullish positioning with record low cash and high margin use, creating structural fragility.
  • Cem Karsan warns this concentration and leverage make the setup vulnerable to reflexive flows and sudden stress.
INSIGHT

VIX Is A Misleading Fear Gauge

  • VIX measures at-the-money implied volatility but poorly captures real fear across strikes.
  • Karsan prefers fixed-strike implied vol changes as a truer fear indicator tied to positioning.
ADVICE

Buy OTM Calls For Tail Exposure

  • Buy long-dated, out-of-the-money calls to own right-tail exposure cheaply during leptokurtic regimes.
  • Use option convexity instead of owning the whole asset to profit from rare large moves.
Get the Snipd Podcast app to discover more snips from this episode
Get the app