AI ‘Stock God’ Returns: Rebuilds Blown-Up Positions With Lower Leverage
TREE NEWS reports: Leopold Aschenbrenner, the founder of the Situational Awareness fund, has begun rebuilding large-scale trading positions in technology stocks including AMD, Intel, SK Hynix, SanDisk, and AI startup CoreWeave. The move comes roughly a month after the fund suffered the largest single-fund loss in hedge fund history, a collapse that forced it to sell most of its public-market holdings to Citadel and slash leverage. Aschenbrenner has partnered with little-known specialist broker Clear Street after his previous prime brokerage relationships were effectively severed.
What Happened
The new positions are being built exclusively through flexible call options on the same core holdings that blew up in July. Nomura strategist Charlie McElligott flagged unusual activity: over two trading sessions, a ‘mystery buyer’ spent a combined $315 million on deep out-of-the-money call options concentrated in AI and semiconductor names, representing $1.1 billion in delta exposure and $5.8 million in vega. Specific trades include 5,000 AMD January 2026 $540.01 calls for $18.7 million, followed by 3,700 $580.01 calls for $17.5 million; roughly $48.2 million in Bloom Energy options; and over $43 million in CoreWeave options. Similar large deep OTM call purchases appeared in SK Hynix, SanDisk, DRAM-related names, and Intel.
Market Implications
The strategy seeks to engineer a gamma squeeze by triggering cascading dealer hedging, pushing underlying prices higher and luring momentum followers. Unlike July, when Aschenbrenner used total return swaps with major investment banks to obtain high leverage, the new approach uses fully-paid options that cap maximum loss at the premium paid, theoretically eliminating margin-call risk. However, the structural change does not alter the core logic: building massive exposure in relatively illiquid momentum names to induce copycat buying.
McElligott noted that the ‘spot up, volatility up’ correlation is re-emerging as a positive driver for volatility dispersion strategies after violent single-stock swings. The semiconductor ETF’s three-month call skew has surged to historic highs, echoing conditions just before July’s turbulence. If momentum reverses, the options premium could go to zero entirely, with no leverage adjustment possible as a buffer.
AI storage-related stocks also face valuation headwinds. After the summer’s sharp correction, these highly concentrated AI-themed names remain in a highly sensitive volatility structure where any momentum interruption could trigger rapid deleveraging. Historically, strategies attempting to force gamma squeezes through deep OTM options depend heavily on sustained market follow-through. Once participants recognize position concentration and choose to hedge or short, the outcome often reverses the original expectation.
Key Takeaways for Investors
- Concentration risk is back: The same names and same playbook are being deployed, raising the specter of another violent unwind if momentum stalls.
- Options market signals: Surging call skew in semiconductor ETFs and massive OTM call buying are warning signs of fragile positioning.
- No broker backstop: Fully-paid options mean Aschenbrenner bears all losses; unlike July, there is no TRS risk-sharing with a bank, so a reversal wipes out premium entirely.
- Watch volatility correlation: The ‘spot up, vol up’ regime favors dispersion strategies but can flip violently, amplifying drawdowns in crowded AI trades.
- Valuation sensitivity: AI storage and semiconductor names remain vulnerable to any momentum break, given stretched valuations and concentrated ownership.
