What's Next For Markets Thoughts From The Options Desk
Oct 19, 2025
Danny Kirsch, Head of Piper Sandler's Options Trading Desk, shares his expertise on recent market volatility. He dives into the recent spikes in VIX and how they affect options trading strategies. Discussion includes the impact of regional bank earnings and the idiosyncratic risks they pose. Danny explains the differences in volatility trends between now and the late 1990s, as well as the seasonal factors that might influence market behavior in November. He also speculates on the effects of falling oil prices on inflation expectations and the potential for AI investments to drive market rallies.
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Volatility Spikes Amplify Downside Moves
- Big intraday VIX spikes amplify put returns beyond their delta, signaling outsized demand for downside protection.
- Such spikes can reflect panic buying or crowded short-vol positions that force rapid hedging and bigger market moves.
Delta Hedging Fuels Rapid Market Moves
- Market-maker hedging around option deltas can accelerate both rallies and sell-offs as implied deltas reprice.
- Short-put/short-stock hedges force selling on vol spikes and buying on rallies when deltas shrink.
Regional Bank Issues Appear Contained
- Regional bank stress looks idiosyncratic to Danny, driven more by underwriting and fraud than systemic credit collapse.
- Strong earnings at big banks support the view that broader system risk remains limited.