Speaker · Updated
Noel Smith: latest market views
Kai Volatility Advisors
Summary
Noel Smith is co-CIO at Kai Volatility Advisors alongside Cem Karsan, and the former Managing Partner and CIO of Convex Asset Management, who co-founded Third Millennium Trading in 1996 and has traded at the CBOE, CME and CBOT.
Chorus has 12 views from Noel Smith across 2 episodes on Monetary Matters and Thoughtful Money since November 5, 2026. Their latest calls: bearish on Invesco QQQ Trust (Nasdaq-100 ETF).
Where they stand
Their latest bullish or bearish call on each company.
- Invesco QQQ Trust (Nasdaq-100 ETF)Bearish ·
What they talk about most
The latest views
Newest first. Every quote is checked against the episode's transcript.
Market sentiment, positioning & volatility
Buying volatility at current prices is a terrible trade; he sold most of his hedges.
Noel sold some VIX options from inventory after the volatility spike. He says the current prices are not ones at which he wants to buy volatility. He monetized most of the hedges he had been carrying, which had more than paid for themselves. He would not put them back on unless forced or unless the setup became much more favourable. He acknowledges that the VIX could go much higher, so this is judgment rather than certainty.
“These prices are definitely not a price that I want to be buying volatility.”at 7:35
Monetary Matters: Structural Flows Will Support Stocks Until the U.S. Treasury Crisis in 2027 | Cem Karsan & Noel Smith | Kai Asset Management ·
Market sentiment, positioning & volatility
Call flies and spreads give better asymmetry than buying outright calls in this volatility regime.
Noel says call spreads and call flies are superior to buying deltas or outright calls on the index or ETFs. Buying calls at around 32 vol loses money if the market rises only 60 basis points, because implied vol falls. Structuring the position with a fly gives asymmetry, so the team wants to make more than it loses in any scenario. He says this is what Kai is looking at doing.
“I think call spreads, call flies... is a superior trade than just closing your eyes and buying Deltas... So there are ways that you can structure the vol into your favor so that you have asymmetry.”at 20:06
Monetary Matters: Structural Flows Will Support Stocks Until the U.S. Treasury Crisis in 2027 | Cem Karsan & Noel Smith | Kai Asset Management ·
Market sentiment, positioning & volatility
Market unlikely to bounce straight back; vol-control signals stay in-sample for about a month.
Noel argues that a sharp fall in a volatility-control strategy's signals creates mechanical selling. Those signals will remain in the sample for roughly twenty more days, so they will not return robustly for about a month. Hedge-fund deleveraging and redemptions are transitory. He says this is structural rather than opinion, so a full rebound to Monday's levels does not seem likely.
“So the idea that we bounce back, you know, right back to where everything was on Monday, man, I'm very circumspect of something like that. That just does not seem likely to me.”at 21:36
Monetary Matters: Structural Flows Will Support Stocks Until the U.S. Treasury Crisis in 2027 | Cem Karsan & Noel Smith | Kai Asset Management ·
AI trade won't be abandoned; money seeks path of least resistance, not a verdict on AI.
Noel rejects the idea that investors are abandoning the AI trade because they dislike AI. He says money always seeks the path of least resistance, and that selling is driven by specific catalysts rather than a rejection of the theme. He says the idea that people are bored of making money in Nvidia is a very small probability, and that the most likely case is that some catalyst has driven the moves.
“The idea that people just abandon the AI trade because they decide they don't like AI. I just don't agree with that.”at 28:45
Monetary Matters: Structural Flows Will Support Stocks Until the U.S. Treasury Crisis in 2027 | Cem Karsan & Noel Smith | Kai Asset Management ·
AI infrastructure & data centers
A blue wave could make data center funding harder, compressing IPO valuations and delaying listings.
Noel suggests a Democratic midterm win could make some political actors less favourable to data centers. That would make funding for them more difficult, which could compress IPO valuations and push a listing back a date or two. He frames it as a possible catalyst among several, including Nvidia earnings ahead of VIX expiry. The argument is speculative and hedged.
“the idea that there is a blue wave and maybe some of those people are going to be less favorable to data centers and the funding for that is going to be a little bit more difficult and that's going to compress IPO valuations, maybe push back a date or two.”at 28:45
Monetary Matters: Structural Flows Will Support Stocks Until the U.S. Treasury Crisis in 2027 | Cem Karsan & Noel Smith | Kai Asset Management ·
Rotation is real: healthcare and homebuilders are holding up while tech looks stretched.
Noel argues that things can move under the surface even when the index is pinned. He points to healthcare and homebuilders doing fine, skew dynamics in gold, and utilities as not especially expensive relative to tech, which is well above them. He says the dispersion amplifies this under-the-hood activity, with macro reasons helping drive it.
“Look at healthcare, you know, it's been doing fine. Look at home builders doing fine... Utilities, they're not that expensive. Relative to tech, they're on the moon.”at 31:45
Monetary Matters: Structural Flows Will Support Stocks Until the U.S. Treasury Crisis in 2027 | Cem Karsan & Noel Smith | Kai Asset Management ·
Invesco QQQ Trust (Nasdaq-100 ETF)Bearish
Higher rates favor value over growth, so QQQ should underperform SPY on a relative basis.
Smith restates Cem's view that higher interest rates punish duration. He says growth stocks need cash flow to pay ongoing bills, and value stocks that generate cash flow now will outperform on a risk-adjusted basis. He frames this as a relative-value trade: short QQQ, which is growth-heavy, against long SPY, which holds more value. He says this is only partly a joke, so the view is less firm than a fully argued position.
“That's why I gave my smart aleck answer, which is short Qs, long SPY as a relative value trade.”at 41:31
Monetary Matters: Structural Flows Will Support Stocks Until the U.S. Treasury Crisis in 2027 | Cem Karsan & Noel Smith | Kai Asset Management ·
Market sentiment, positioning & volatility
Clustered expiries and events in Nov-Dec will clear options positioning and open a volatility window.
Smith points to a dense calendar: Nvidia earnings, VIX expiration, November opex, the December 9 Fed decision and December opex. He argues that these events will clear options from the board and free up trading afterwards, opening a window for volatility. Kai plans to take advantage of this asymmetrically with options structures, while acknowledging that timing the exit is hard.
“All of those things are going to take a lot of options and just kind of wipe them off the board. And what that means is that all the activity that can commence more freely afterwards does open up a window of opportunity for volatility.”at 54:54
Monetary Matters: Structural Flows Will Support Stocks Until the U.S. Treasury Crisis in 2027 | Cem Karsan & Noel Smith | Kai Asset Management ·
Market sentiment, positioning & volatility
Volatility being drained from the market will support stocks into year-end and the January option expiries.
Smith says vol is leaving the market because the election has turned unknowns into knowns. Market makers who were short stock to hedge options now need fewer shares as vol falls. Their hedge ratio changes, so they buy stock back, which supports prices. He says this is a traditionally bullish setup into year-end. As January LEAPs decay and lose value, their vol also gets pulled out, which adds more supportive flows. He says the main driver of the market going up is vol draining out into year-end. He is careful to frame this as a flow effect and not a statement that everything is now safe.
“the most important part for the market going up is the vol getting sucked out going into end of year. Traditionally, it is a bullish setup.”at 7:27
Thoughtful Money: Crisis Is Coming In Early 2027 | Cem Karsan ·
Falling rate expectations favor homebuilders and small caps, with the Russell 2000 gaining more than QQQ.
Smith points to futures markets. Early in the year traders were pricing cuts, then hikes, and now they price only about 50bp of hikes through next September. He says this explains why homebuilders are doing well, since rates coming down help them. He also argues the Russell 2000 has more upside than the Nasdaq (QQQ) in a lower-rate setting. He ties this to credit and equity being linked: if borrowers can service debt at lower rates, their creditworthiness and equity both improve. He calls this a mechanical effect of the market, not an opinion on the election.
“The Russell probably has more upside with a lower rate environment.”at 11:51
Thoughtful Money: Crisis Is Coming In Early 2027 | Cem Karsan ·
Market sentiment, positioning & volatility
Combined S&P options, VIX options and variance futures hedge catastrophic drawdowns and profit when volatility spikes.
Smith says his firm's hedging product uses S&P options, VIX options and variance futures to protect against catastrophic drawdowns. He argues the combination is structured so that a volatility spike cannot leave the position losing money, which lets investors act without being paralyzed. He also says the strategy can capture crisis alpha. He pairs it with other strategies to reduce sequencing risk.
“So the combination of those things, the idea that volatility goes up and you don't make money is mathematically impossible.”at 1:08:44
Thoughtful Money: Crisis Is Coming In Early 2027 | Cem Karsan ·
Currency debasement and a Bretton Woods unwind make logical sense from both Austrian and Keynesian views.
Smith says the debasement idea and the possibility of a Bretton Woods-style unwind, which people have been discussing, make logical sense from both Austrian and Keynesian standpoints. He finds it hard to argue against them. He says his main function is working out how to time the trade and profit from it, rather than whether the thesis holds.
“it all makes logical sense from both an Austrian and a Keynesian standpoint. So it's very hard for me to argue against those things.”at 1:22:04
Thoughtful Money: Crisis Is Coming In Early 2027 | Cem Karsan ·
Shows
- Monetary Matters · 1 episode
- Thoughtful Money · 1 episode
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