“GO TIME” read the subject line of the first Q4 note from Nomura’s Charlie McElligott, who was on fire Monday.

Charlie took clients on a rollicking ride through Q3 quarter-end, when the impact of the much-discussed quarterly options roll/reset was offset by what he described as a “massive” series of call spreads that traded late Friday.

Long story short (there’s probably a pun in there somewhere, but it’s not intentional), the impact of the quarterly roll was supposed to be one-way (Charlie used the same language), but upside index options plays for November amounting to $233 million (!) in premium paid turned what would’ve been a large vol supply event into a vol buy, altering the setup for Q4 and the end-of-year trade.

What does that mean? Well, colloquially, the read-through is that there could be embedded overhead pushback on a rally. McElligott elaborated. “If this is who we believe it is, the entity trades with extreme discretion and is typically uber-quick to monetize a winning trade,” he said.

So, if the market moves in favor of those positions, profit-taking is likely. Charlie spelled out the implications of that hypothetical profit-taking. “[T]he market is operating in some ways with an upside overhang thanks to there being all of this delta to go if we see SPX rally and those options print,” he said.

To get a more complete picture, you need to factor in seasonality, which is obviously bullish (think: Performance-chasing).

In addition to the normal seasonality, it’s also possible that some (many) are still underperforming in light of a frustrating first seven months, during which A.I.-assisted “Magnificent 7” gains (and the best first half for the Nasdaq 100 on record) put under-positioned discretionary investors in a deep, deep hole.

McElligott discussed all of that, and he folded in the above-mentioned upside overhang.

“When you add the bullish seasonality, the anticipated performance-chasing dynamics for investors that couldn’t own enough of the top stocks or simply a market YTD which has punished all parties for downside hedging, having short books and/or owning gamma, there is still a strong case for upside into year-end,” he wrote. “But it does lose some steam in the sense that we now know there’s a lot of delta for sale into at least the first wave of any rally ahead of those November Call Spread expirations.”