Options traders fading big moves in both directions, says Cboe's Mandy Xu

• Options traders are fading large moves, taking profits on rallies and adding downside protection on up days, and loading up on calls on down days (TACO trade).
• Equity options positioning has been reactive to headlines, with a belief in a 'Trump put' (policy reversal/capitulation) on severe sell-offs.
• Oil options show remarkably consistent bullish positioning, with strong call demand, a rare occurrence historically preceding prolonged elevated oil prices.
• AI concerns are fading, as macro risks and geopolitics increasingly dominate market sentiment, leading to higher stock correlations.

Mandy Xu from Cboe discusses options market activity, noting that traders are fading large moves in both directions. For equities, investors are taking profits on rallies and adding puts, suggesting limited near-term upside. In contrast, oil options show remarkably consistent bullish positioning, indicating expectations for prolonged elevated oil prices. AI concerns are fading, with macro risks and geopolitics now dominating market focus.