Beyond The ObviousThe melt-up remains alive and well, but the more interesting opportunities may now sit outside the obvious trades. Protection has become unusually cheap, software is quietly improving, and gold is setting up for a potential squeeze.SmokedSkew has been resetting lower since March, but the latest collapse in the SDEX index is something we haven't seen in a very long time. It sounds absurd, but investors are now in full panic mode to avoid panic.Source: LSEG WorkspaceExtremeGoing into the 2021 market highs, both SPX and skew were rising. That is the more "normal" setup, as investors pay up for low-delta puts to hedge their books. The peak back then marked a structural shift lower in skew as investors increasingly chose to sell the underlying instead of buying downside protection via options. That regime lasted for quite some time.This time around, the crowd is doing the opposite. Investors are aggressively repricing downside risk lower. After all, hedging costs money. What many forget is that this is precisely the purpose of insurance. You buy house insurance hoping your house never burns down. Today, that insurance is trading at a steep discount.Source: LSEG WorkspaceVIX seasonalityVIX tends to spike during the first part of June. More here as well as two options trades GS likes.Source: Equity ClockThe software rotationIn mid-April we outlined our software bounce thesis. We wrote: "IGV has been absolutely crushed, but is now sitting on major support just as positioning looks washed out and momentum starts to turn. After four failed attempts, the setup for another bounce is building again."IGV has since rallied roughly 33%, reclaiming the 200-day moving average for the first time since last year's washout. The squeeze remains alive and well, but the easy money has already been made. Even so, software continues to trade well below the highs.Source: LSEG WorkspaceNothing beats semisSOX has continued to outperform software since the recent lows, but the leadership baton may be starting to rotate. Over the past 10 days, software has actually outperformed semis.Source: LSEG WorkspaceSource: LSEG WorkspaceShortsShorts "herding" in software, while semis shorts are hovering near recent lows. Short squeeze risk is building rapidly in software, now sitting at the 100th percentile versus the past six years. Latest software note here.Source: JPMThe golden bounceGold tagged the longer-term trend line and the 200-day moving average, then printed a perfect hammer candle. A textbook technical reversal setup.Source: LSEG WorkspaceThe gold pukeGold speculative positioning saw a sizeable reduction through mid-May. Between May 12–19, speculators sold a combined $10.7bn, marking the fifth largest reduction over the past two years, with long liquidation ($7.6bn) accounting for the majority of the move. How to play a possible squeeze higher via options, see here.Source: GSThe oil connectionRates increasingly trade as a derivative of oil. Crude rolls over, yields roll over. Crude squeezes, yields squeeze. More on oil here.Source: LSEG WorkspaceOil and bond volatilityMOVE and OVX are living in perfect harmony. Bond volatility continues to track oil volatility almost tick for tick, reinforcing crude's growing influence over rates.Source: LSEG Workspace