Stocks made a record high. Two big bearish trades point to skepticism — SkimNews
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- Nasdaq-100 climbed 15% from its July low and is now 2% above its June record, while the S&P 500 returned to all-time highs after a two-month battle with surging interest rates.
- SPY saw a 100,000-lot put spread roughly an hour after Tuesday's open — buying $61 million of 655-strike March puts and selling $17 million of 500-strike March puts for a net $44 million cost, most profitable if SPY falls 35% to $500.
- The SPY put spread was roughly four times larger than the next-biggest trade (an $11 million call spread) on a day when options volume ran more than 20% above the 30-day average, per SpotGamma.
- SpotGamma's Brent Kochuba noted March SPY options were the cheapest in 90 days with fairly low implied volatility, even as the Cboe VIX Index briefly slipped below 15.
- Meta options drew an even larger trade in the January 2029 expiry — likely buying back $89 million of 560-strike calls while opening $69 million of 700-strike calls — using in-the-money strikes more than two years out, per SpotGamma.
- Meta has rallied 20% over the past month on surging downloads of its personal assistant Muse, but Barchart's sentiment indicator showed net negative options flow in the stock, unlike SPY where bullish retail traders drove the overall tone.
Why it matters: With the SPY put spread roughly four times the size of the next-largest SPY trade on a 20%+ volume day, one institution paid $44 million to insure against an 18%+ S&P 500 drop. SpotGamma's Kochuba observed March options are at 90-day vol lows — the put spread is a cheap tail-hedge, not a directional call, yet its outsized size against the rally's record highs signals institutional conviction that this market is fragile.
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