Submitted by SpotGamma
CBOE’s Dispersion Index (DSPX) is at levels only seen during Covid and the April ’25 tariff crash, while Correlation (COR1M) is near all-time lows. This divergence signals extreme positioning risk driven by the AI stock chase, and makes SPY downside hedges historically cheap.
Traders have been chasing AI related names in such heavy-handed fashion that it has now created positioning risk for the stock market.
Encapsulating this view are two popular CBOE options indexes: Dispersion (DSPX) and Correlation (COR1M).
What Are Dispersion DSPX & Correlation COR1M?DSPX compares the options prices (IV) of the top US stocks vs SPX IV, and measures how different they are from each other. High dispersion means traders are assigning vastly different options prices to individual names. Today, we have traders frothing to chase upside in MU, SNDK, and the like, while scorning other sectors.
COR1M measures the direction of options prices for top US stocks vs the SPX. During periods of calm we generally see traders bit up call options, and sell SPX options, which creates low correlation. Conversely, when there is a lot of fear in the stock market, correlation spikes as traders sell all stocks and buy SPX options – typically puts.
Currently DSPX (blue) is at highs only seen since the Covid crash after just passing highs from the April 2025 Tariff drama. Meanwhile, COR1M (red), is nearing it’s lowest reading ever.
This gives us a massive never-before-seen divergence (black arrows) between spiking options prices (high dispersion) and only certain stocks surging higher (low correlation).
The previous highs in DSPX came during massive risk-off periods! Why? Because in both 2020 and in 2025 traders were pricing in vastly different risk due to traumatic events: in Covid cruise lines were crashing massively, whereas healthcare stocks were bid. During April ’25 it was about parsing tariff winners and losers. These heavy “winners and losers” environment created a lot of dispersion in options prices.
Today the massive dispersion is driven by the chase in AI stocks, which is now at extremes.
Notice, too, how correlation (red) spiked during those previous events as traders sold stocks sharply lower. In other words: all stocks crashed in Covid/Tariffs (i.e. high correlation), just some stocks crashed harder (high dispersion).
However correlation is at lows not seen since July of 2024, with July ’24 being the all-time low. This comes as traders are very complacent about downside risk – despite the Iran war situation.
How Do Options Prices Differ Across Stocks?An under the hood view of this dynamic is shown with SpotGamma’s Compass tool. If a stocks call options are much more expensive than their calls, the plot lands toward the right of this chart (X axis). As traders anticipate more stock movement (IV), the plot lands higher on this chart (Y axis).
Compare SMH (yellow arrow), which is at the top right of this chart. Traders are betting that this stock is essentially going to contine crashing higher.
The tech-heavy QQQ is also in a showing a heavily bullish positioning, which traders betting that upside hot streaks continue. The big single stock constituents have effectively “infected” the Nasdaq Index with uber-bullish views.
The SPY, however, has been shifting away from call leaning positions, to put positions. However, the overall IV remains low, showing traders have simply been backing off from call positions vs strongly betting on downside.
SPX QQQ SMH Skew
The extreme readings here suggest options positioning could drive a stock volatility event, as extreme call positioning unwinds.
This difference (or dispersion) in options prices here creates many different trade setups, with different risk-rewards for traders:
SPY put options may be relatively much cheaper that puts in SMH, or QQQ. We view these as low risk, with potentially high reward.
More dramatically, selling calls in SMH or QQQ could offer fantastic rewards, but also bring major risks if the hot upside continues.
Parsing what type of downside position that may be right for you involves mapping out:
Knowing these two elements sets up how you might select and position for a potential downside move.
Join our upcoming event on June 9th: Trade Like the House, where we will be combing positional analysis with probabilities, to gain structural edge with your trading.
Tyler Durden Wed, 06/03/2026 - 14:20Authored by Chase Smith via The Epoch Times,
New York Democrats are moving to give state lawmakers the power to redraw the state’s congressional maps, entering the national fight over control of the U.S. House.
The proposed constitutional amendment would allow lawmakers to draw district lines themselves and redraw them mid-decade. It had not been formally filed as of Tuesday morning, but The Epoch Times has reviewed a memo describing the proposed changes.
The proposed amendment would change New York’s redistricting system in several ways.
According to the memo, state lawmakers could draw the maps themselves if the state’s independent redistricting commission fails to agree on a plan, and could approve maps with a simple majority vote rather than the larger vote the constitution now requires.
Court fights over the maps would go back to the Legislature, rather than to a court-appointed expert known as a special master.
And lawmakers could redraw congressional districts between the once-a-decade census counts.
The memo also lists new rules for how maps must be drawn. They would still bar maps that weaken the voting power of racial or language minorities and would still require districts to be equal in population and connected. The list does not include the constitution’s current ban on drawing districts “for the purpose of favoring or disfavoring incumbents or other particular candidates or political parties.”
New York voters created the independent commission in 2014, approving a constitutional amendment meant to take map-drawing out of politicians’ hands. The system encountered issues the last time it was used.
After the commission deadlocked, Democrats in the Legislature drew their own maps. In 2022, the state’s highest court threw them out, ruling they were an unconstitutional partisan gerrymander, and a special master drew the lines instead.
Senate Majority Leader Andrea Stewart-Cousins defended the plan in an emailed statement to The Epoch Times on Tuesday, June 2.
“New York cannot afford to stand still,” she said. “We cannot ignore the reality that Republicans have repeatedly sought to undermine democracy through various attempts to gain political advantage. At a time when democracy is under attack across the country, we have a responsibility to protect all voters including the minority communities and ensure that every New Yorker continues to have a voice. This legislation remains firmly rooted in the democratic process, giving New Yorkers themselves the final say at the ballot box.”
New York Sen. Andrea Stewart-Cousins speaks during an event at the Rockefeller Foundation on in New York City on Feb. 20, 2018. Dia Dipasupil/Getty Images
She added, “We believe these changes will ensure that our state has the tools necessary to preserve a level playing field in the face of Republican-led efforts to tilt maps and weaken democratic participation—without compromising the integrity of the Independent Redistricting Commission.”
The push follows a wave of mid-decade redistricting that began in Texas last summer, when Republicans moved to redraw their congressional map at President Donald Trump’s urging. California Democrats responded with their own redraw. Missouri, North Carolina, Ohio, Virginia, Florida, and Tennessee have since taken up mid-decade efforts, with other states discussing the matter as well.
House Minority Leader Hakeem Jeffries (D-N.Y.) has made the state’s congressional lines part of his strategy to win back the House. He tapped Rep. Joe Morelle (D-N.Y.) to coordinate with state officials, and Morelle met with Gov. Kathy Hochul and legislative leaders in Albany on May 5.
The change would not happen quickly. A constitutional amendment in New York must pass the Legislature twice, this year and again after the 2026 elections, and then win approval from voters. The earliest it could affect any maps is the 2028 election. The legislative session ends June 4.
Republicans oppose the plan. In a May 31 statement to The Epoch Times, Assembly Minority Leader Ed Ra, a Republican, called any plan to redraw maps mid-decade or change the commission “a shameful attempt to nullify the will of the voters.”
At a June 1 news conference as those reports continued to surface, Ra said Democrats started the fight in New York well ahead of Texas’s move last year.
“It was started by New York State Democrats,” he said, referring to previous maps drawn by New York Democrats. He noted that voters rejected a similar measure in 2021.
Rep. Mike Lawler (R-N.Y.) speaks to reporters at Rockland Community at Rockland Community College in Suffern, N.Y., on May 22, 2026. Samira Bouaou/The Epoch Times
Rep. Mike Lawler (R-N.Y.) said New York Democrats drew their own maps in 2022 to protect their House majority.
“They just went and drew their own maps and totally disregarded the Constitution,” he said at the press conference.
Assemblyman Matt Slater, the top Republican on the Assembly Elections Committee, said the current system is functioning correctly.
“The system is working,” he said on June 1, adding New York now has “some of the most competitive congressional districts anywhere in the country.”
Sen. Mark Walczyk, the top Republican on the Senate Elections Committee, said voters were clear in 2014.
“We want an independent redistricting commission,” he said.
Tyler Durden Wed, 06/03/2026 - 14:05