They’re chasin’ it. The rally, I mean.

If that sounds like a familiar opener (“Do you ever have déjà vu, Mrs. Lancaster?”) that’s because I used it last week. Or something very similar while documenting demand for upside optionality into a melt-up that mints a new all-time high for benchmark equities every third session or so.

On Monday, we got more evidence that the volume on the AI hype machine’s dialed up to a Spinal Tap-esque “11” when AMD soared almost 30% on news of a new strategic tie-up with Sam Altman. As I put it in the linked article, companies in the AI-Semi-Mag7 ecosystem are increasingly prone to binding their fates such that the success of one assumes, and in some sense even depends upon, the success of the others.

Investors are just smitten. Head over heels. And I gotta tell you, blind love tends to dead end in disappointment the same way blind faith does when Jesus doesn’t show up at the side of your hospital bed in the moments before you fade away into eternal unconscious nothingness. You’re better off praying to Donald Trump. He really will pardon you for your sins.

Aaaanyway, you should’ve bought the semi ETF. When? Anytime, really. It’s up about 4,000% since the darkest days of the GFC. But if you bought the “Liberation Day” dip in that product, you’d have doubled your money by now. Or damn near.

If you pan out on that chart to, say, a 10-year view, the recent rally appears as an almost vertical inflection. The product came into Monday riding a five-week run of gains.

It’s worth looking “behind-the-curtain,” so to speak, to get a feel for sentiment, although you’d be forgiven for suggesting all one needs is that chart to determine that sentiment must be bullish.

The figures below are from Nomura’s Charlie McElligott. He provides helpful boxes and arrows just in case you’re unsure as to where you’re supposed to focus.

The upper-left chart illustrates demand for downside protection on the semi ETF collapsing relative to upside optionality. The figures on the bottom row show you out-of-the-money calls bid relative to at-the-money calls, and demand for downside crash protection falling away relative to near-the-money puts, respectively.

The point: There’s far more in the way of fear around the right-tail than the left, which is to say market participants are very worried about under-capturing an extension of the melt-up and not at all about a big drawdown.

Investors, McElligott wrote, are “chasing AI stocks higher to hedge the right-tail, with call skew bid while skew and put skew are crunched as downside hedges bleed out.”