The Nasdaq-100 rallied 3.3% Tuesday to 29,733, pushing a key options-bullishness gauge to one of its ten biggest single-day jumps of the past decade. Traders rushed to cover shorts and buy calls, and the rally's persistent link to Bitcoin means the tech-heavy index's momentum doubles as a crypto signal too.
Options traders piled into bullish bets on the Nasdaq-100 on Tuesday hard enough to register as one of the most lopsided sessions of the past ten years. The price of one-standard-deviation out-of-the-money QQQ calls jumped 42% that day, the biggest single-day change in five years and the ninth-biggest in a decade, according to Nations Indexes.
According to Nations Indexes president Scott Nations: "Pessimists threw in the towel and optimism was running amok today"
Nasdaq closes in on its June record
The Nasdaq-100 climbed to within 3% of its June 3 record after a more than 10% intraday drop through the prior Wednesday. The S&P 500 extended its own gain to just shy of 6% over four sessions, while Treasury yields and crude oil both fell. Options volume on the Nasdaq-100 is running 18% above July's pace this month, which Nasdaq's Kevin Davitt tied to renewed participation after strong earnings and the market's stabilization following the Fed's latest meeting.
Earnings growth undercuts the bubble argument
Behind the rally, S&P 500 earnings are on pace to grow 47% in the second quarter, which would mark the biggest jump since the 2021 rebound from Covid, according to FactSet. The forward 12-month price-to-earnings ratio sits at 19.6, below the five-year average. Stocks had begun stabilizing last week after news broke that hedge fund manager Leopold Aschenbrenner's Situational Awareness had been in the midst of forced selling of billions of dollars worth of AI names, and the 10-year Treasury yield stopped short of last year's highs.
Bitcoin traders are watching the same signal
Bitcoin has increasingly traded as a high-beta proxy for the Nasdaq, rising more than the index on the way up and falling harder on the way down. Institutional traders now factor Nasdaq momentum directly into Bitcoin positioning. MicroStrategy's continued place in the Nasdaq-100 also gives index funds indirect exposure to the company's Bitcoin holdings. Separately, a 5% Nasdaq pullback might translate into a 10% or greater Bitcoin drawdown if leveraged crypto positions unwind quickly.
Sources: CNBC, Crypto Briefing
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