The AI vol buyer, a mysterious force that has been dormant for some time, has made a surprise return to the concentrated AI names. Over the course of Friday and the post-Labor Day reopening, this large buyer spent approximately $315 million in options premium, adding $1.1 billion of delta and $5.8 million of vega through large FLEX calls.

This influx of capital is reviving the “spot up, vol up” dynamic in single-name tech, which had been dormant for some time. As a result, traders are once again enjoying a powerful P&L tailwind from dispersion and short-correlation trades.

To illustrate this point, semis skew is currently very well bid, with the sector showing a significant improvement in volatility. However, overall semis vol remains dormant, indicating that there may be more room for growth in this area.

The return of the AI vol buyer highlights the importance of staying vigilant and adaptable in today’s market. As traders, it is crucial to remain aware of potential changes in market dynamics and adjust our strategies accordingly. By doing so, we can maximize our potential for profitability and minimize losses.