Lots More on How TikTok Options Traders Got Quiet

Benn Eifert (0:02)

Bloomberg Audio Studios.

Joe Weisenthal (0:04)

Podcasts, radio, news. Tracy, we have Benn in a leather jacket.

Tracy Alloway (0:10)

Yeah, well, it's not just a leather jacket. It's a black leather blazer with sort of braided edges. It's got a little bit of a, wait, is this an insult or a compliment?

Joe Weisenthal (0:20)

I don't know.

Tracy Alloway (0:21)

A little bit of a Ren-Fair feel to it.

Benn Eifert (0:23)

Absolutely, that's a, to a volatility nerd, that's a compliment.

Tracy Alloway (0:27)

Okay, good, all right, I wasn't quite sure.

Joe Weisenthal (0:29)

This is like one of the, that would be a very polarizing comment to some people.

Benn Eifert (0:33)

Not to me.

Joe Weisenthal (0:34)

I do not have Ren-Fair vibes, but look, I respect it. These are Ren-Fair times, these are Ren-Fair times. So I get it, I get it.

Benn Eifert (0:42)

They absolutely are, there's pictures of me on Twitter in Nightingale armor with his sword, so I think this is fair game.

Joe Weisenthal (0:50)

I did a dead list.

Tracy Alloway (0:51)

I am both the most popular trader and most successful trader at Citadel.

Joe Weisenthal (0:56)

Feta is going viral.

Tracy Alloway (0:57)

Barges.

Joe Weisenthal (0:58)

This is an after school special, except.

Tracy Alloway (1:00)

I've decided I'm going to base my entire personality going forward on campaigning for a strategic pork reserve in the US.

Joe Weisenthal (1:06)

Black gold.

Tracy Alloway (1:07)

These are the important questions. Is it robots taking over the world?

Joe Weisenthal (1:10)

No, I think that in a couple of years, the AI will do a really good job of making the Odd Lots podcast. One day that person will have the mandate of heaven.

Tracy Alloway (1:19)

How do I get more popular and successful?

Joe Weisenthal (1:22)

We do have the perfect guest.

Tracy Alloway (1:25)

You're listening to Lots More, where we catch up with friends about what's going on right now.

Joe Weisenthal (1:30)

Because even when the Odd Lots is over, there's always lots more.

Tracy Alloway (1:33)

And we really do have the perfect guest.

Joe Weisenthal (1:39)

We are of course with Benn Eifert, QVR Advisors. Benn, who's been getting steamrolled the most by this market? And I have some thoughts on this market, but I want to hear yours.

Benn Eifert (1:49)

No, it's a super fun market. I mean, really, first you had the DeepSeek thing hit, right? And that was really interesting because equity markets went down, but the fund was all under the surface, right? It was, what did we sell off? 8 or 10 percent in index. It wasn't a huge deal, but there were like eight standard deviation moves in market neutral factor type relationships and crowded equity long short. And so you saw, you know, the type of people that had the really popular equity positions, Nvidia and Tesla and all these kind of stocks just get really, really murdered. You heard of a lot of pain at the big multi-strats. Again, you have to put that in context because they're pretty well risk managed. The losses weren't that large in percent terms, but you had again just very, very, very large moves. And then I think the interesting thing about that was that led to a lot of de-risking in hedge funds. So you had pretty high gross and net leverage coming into that. And then it came off quite a lot, a lot of de-risking.

And then when Liberation Day hit, I think positioning wasn't nearly as off sides as it could have been otherwise. And so you did see obviously big drawdowns in the equity market, big rallies back, a lot of volatility. But I think the losses that you saw among hedge funds probably weren't as bad as they would have been otherwise. Another interesting thing to note, and we talked about this a lot, there really isn't that much of the kind of super crowded, short volatility, short tail risk, tail risk selling kind of stuff out there that there was like in 2019, 2020 for the pandemic. So you didn't see that those kind of fireworks, right? There weren't like hedge funds getting liquidated and people getting carried out in body bags and big auctions of all their positions, making markets go crazy. You just didn't really have that kind of stuff. What you had was a pretty fundamentally driven, you know, orderly sell off followed by, you know, goofy rallies back and forth on Trump tweets and what's he going to do and all this kind of thing. But it was really, I think, much more about, about, you know, fundamentals of expectations of what is policy really actually going to be and how much does that matter for the economy as opposed to like technical positioning, hedge fund blow ups and people getting steamrolled.