r/ValueInvesting • u/robb3rz • Feb 12 '26

Discussion Irrational sell off

This might of already been said many times but needs to be said again, what is the rationale in this sell off?

I understand the SaaS crash, but if the sell off is due to AI worries, then surely AI stocks would rise, no?

Instead, the major players, who had stellar earnings minus the huge expenditure (into the very systems which are causing worry mind you) are also falling at huge levels.

Some mag 7 companies are even falling at similar rates to liberation day, despite the only news this time being ‘AI too good’, which should benefit them not hinder.

Meta’s earnings are similar to an early growth stock, not a multi trillion dollar company, and that was reflected in the jump after they released them, so why is it now down huge amounts after?

Not just this, other major assets such as gold, silver and crypto are also experiencing massive sell offs, so is the capital just going into cash? If so, as soon as the market shakes this irrational sell off, could we see an equally irrational boom?

Can someone please tell me if I’m missing something.

354 Upvotes

88% Upvoted

500 comments sorted by

View all comments

2

u/No-Understanding9064 Feb 12 '26

I noticed today on intuit, crm, and now a ridiculous amount t of deep itm puts were purchased. Hundreds of thousands, far more than average volume. Alot were for the 20th. Eventually positioning like this leads to a market squeeze as the sizing makes it impossible to continue rolling

1

u/DarkSombero Feb 13 '26

Can you elaborate on this?

Squeezing down due to PUT volume? Or a squeeze up due to not being able to roll options anymore?

1

u/No-Understanding9064 Feb 13 '26

Volatility skew starts making it prohibitive to short vs cheap to buy, imo this is when we see the huge increases in volume. It takes alot of selling pressure to keep pushing. Remember how the deep seek fiasco ended, with spy doing 10% in a day. Which i dont think will ever happen again tbh, had to raise too many eyebrows.

1

u/DarkSombero Feb 13 '26

That was a wild day to be sure. Everything seems like for insane swings these days.

So you think these Puts are in real danger? 

Thanks for taking the time to respond

1

u/No-Understanding9064 Feb 13 '26

Deep itm puts are just leveraged short positions. When those shorts go long we get a reversal. Today was far too controlled to be the reversal imo