Core Viewpoint - The recent simultaneous rise of the S&P 500 index and the VIX index indicates a potential asset bubble driven by AI, suggesting that the expansion process may still be in its early stages [1][3][10]. Group 1: Market Dynamics - The occurrence of "price up, volatility up" is a hallmark of asset bubble formation, contrasting with the typical negative correlation between the S&P 500 and VIX [3][4]. - The current VIX index remains near its historical median, indicating that both the market and volatility have room for further upward movement [3][10]. - The report highlights that the primary risk in the current market is missing out on an upward trend rather than a significant downturn [3]. Group 2: Individual Stock Volatility - There is a notable increase in individual stock volatility, particularly among large tech stocks, with examples such as Meta's 11.3% drop on October 30, which was approximately 8.3 times its historical volatility [7]. - Amazon experienced a 9.6% increase on October 31, with its volatility being about 5.5 times its historical level [8]. - The frequency and magnitude of significant fluctuations in U.S. tech stocks have reached historical highs, surpassing even the dot-com bubble period [9]. Group 3: Bubble Stage Indicators - Despite the signs of a bubble, the VIX index is not at extreme levels, currently around 15, compared to over 40 during the late stages of the dot-com bubble [10]. - The realized volatility of the Nasdaq 100 index remains relatively controlled, significantly lower than the average of 93% during the peak of the internet bubble [13]. - These moderate indicators suggest that the current AI-driven bubble may have considerable room for further development before reaching a peak [14][17]. Group 4: Investment Strategies - The report recommends that investors should not exit the market entirely but instead utilize asymmetric tools like options to participate in potential upward movements while managing risks [3][17]. - Suggested strategies include selling VIX put options to construct zero-cost S&P 500 call spreads and buying long-term S&P 500 up-variance to capture the ongoing expansion of the bubble [17].