Bulls Pile Into Calls But Hoard Cheap Crash Puts
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- S&P 500 is back at an all-time high with VIX near year-to-date lows, masking extreme single-stock swings, a record S&P vs. Nasdaq 100 volatility spread, and a 25% semiconductor pullback that drove historic put-buying into the VanEck Semiconductor ETF (SMH).
- Nasdaq options logged one of the most bullish sessions in ten years coming into August, with Cboe setting a record for call-option trading volume as the market broke out post-earnings.
- S&P call options show the most bullish positioning relative to puts in at least a year across tenors from one to twelve months, per a Cboe report published Monday, with the 25-delta puts-to-calls ratio at its lowest since mid-2024.
- Traders are simultaneously hoarding deep out-of-the-money tail-risk puts — the ratio of 10-delta to 25-delta puts sits in the 66th percentile high of the past five years, according to Cboe data.
- Russell 2000 volatility dropped below 17 last week to a 2nd percentile low over five years, after a 20% year-to-date rally that outpaced both the S&P 500 and Nasdaq 100.
- Mandy Xu, Cboe's head of derivatives market intelligence, said typical portfolio hedges have been sold but far out-of-the-money crash protection remains elevated — calling it the stock-market version of 'trust but verify.'
Why it matters: The simultaneous extremes — record bullish call positioning alongside five-year-high demand for cheap crash-protection puts — reveal traders are hedging for a sharp sell-off while betting on continued upside. The 25% semiconductor pullback and historic SMH put-buying show how quickly single-stock routs have already tested conviction this summer.
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