The S&P 500 climbed to an all-time high this week as call-option trading set several records on Cboe Global Markets and the VIX slid to its lowest level since January. Open interest data point to the 760 and 785 strikes as the market's next support and resistance levels, while semiconductor stocks and a pause in Treasury yields added to the gains.
The S&P 500 surged above 7,700 for the first time in its history on Tuesday, as more than four million index call options changed hands on Cboe Global Markets. Shares of SpaceX, this year's marquee IPO, stabilized and rallied despite an earnings report and the end of its first lockup period.
Options volumes hit records
That Tuesday volume topped the previous record, set in May, by 10%, according to exchange data. Zero-day-to-expiry call options accounted for 2.4 million of the S&P 500 trades that day, also a record. The ratio of puts to calls across all options plunged to 0.83, the second-lowest level recorded — below the average of more than one, which reflects put options' primary use as a hedge.
Open interest points to key levels
Total open interest in the S&P 500 ended the week at 27.4 million contracts, in the 93rd percentile over the past year, according to Cboe. The share of that open interest held in calls sits in the 95th percentile.
The 760 strike, about 1.7% below where the SPDR S&P 500 ETF Trust closed Friday, is the most popular level by combined put and call open interest, according to Barchart data. That is largely down to 94,000 open puts, which could offer support if the market dips and lingering bears take profits. On the upside, the biggest level for call buyers is the 785 strike, where 114,000 calls are open.
VIX falls to a 2026 low
On Friday, the VIX fell to its lowest level since January as the S&P 500 added 0.6%, bringing the week's advance to 3.6%. According to CNBC: "That's what it used to sound like", a trader on the Cboe floor in Chicago said, describing Tuesday's rally.
Semiconductors and yields add to the gains
Beaten-down semiconductor stocks jumped, with the iShares Semiconductor ETF advancing more than 7% on the week. The Corgi Lithography & Semiconductor Photonics ETF added 13% over the same period. The 10-year Treasury yield stopped its ascent at 4.7%, also helping the rally. S&P 500 earnings are on pace to grow 47% in the second quarter, which would be the biggest jump since the rebound from Covid in 2021, according to FactSet.
Source: CNBC
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