These days the market seems to move softly and wildly at the same time. Investors have bet on AI as the great disruptor and are exploring every possible angle: from its potential as an executioner of mythical dinosaurs, to destroyer of credit markets, or SaaS killer. But all these angles agree on one thing: there will be winners and losers. So one day IBM drops because the new Claude model does COBOL, the next day SaaS companies fall, the day after that NVIDIA and the hyperscalers correct because people are afraid we’re spending our last shirt on the bet for more datacenters. When investors are confused, which is most of the time, the play is to lean on narrative bets and pick winners and losers.
The most striking thing? The S&P 500 has been pretty stable for a month while its stocks crash or rocket every single day, because nobody is betting on a disruption that ends the system — just a transformation that moves value from some to others, a zero-sum keeping the total value constant.
And the smartest players in the market already have a name for this: dispersion trade. They don’t bet on who wins or who loses. They buy options on individual stocks while selling options on the index — betting that the gap between the two will keep growing. In other words, they are pricing exactly what I described above. Chaos has a market.