Here are the odds of bear markets in each stock index this summer
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- S&P 500 options are pricing in a 10.5% chance the index closes at 6,088 — a 20% drop from its 7,610 closing high — by Aug. 31, with roughly double those odds, about 21%, of touching that level, per ThinkOrSwim data.
- Nasdaq 100 put contracts imply a 32% chance of a 20% bear-market decline by Aug. 31, with the index's implied volatility near 33 versus 22 for the S&P 500.
- Russell 2000 small-caps sit in between, with 30-day implied volatility at 29 and roughly 24% odds of losing at least 20% by Aug. 31.
- Scott Bauer, CEO of Prosper Trading Academy, said he would sell Nasdaq volatility and buy S&P volatility, calling the Nasdaq vol level 'pretty extreme' and citing 'FOMO selling' as traders free up cash for SpaceX.
- Concentrated selling in big-tech AI winners is responsible for the volatility spread, meaning the odds of steeper moves in either direction are higher in the tech-heavy Nasdaq.
- The last technical S&P 500 bear market was the roughly 10-month 2022 downturn tied to higher interest rates; intraday the index fell more than 21% during last year's tariff-announcement sell-off.
Why it matters: A 32% implied probability of a 20% Nasdaq 100 drop by Aug. 31 versus 10.5% for the S&P 500 means traders are pricing tech-stock risk at roughly triple the broader market, and Bauer's stated trade — selling Nasdaq vol, buying S&P — is a direct bet that the current tech volatility premium is overdone and ripe to compress.
