S&P 500 call volume hits record 4 million as FOMO builds

Record call-option volume and a subdued VIX powered the S&P 500 to fresh highs this week as traders piled into bullish bets.

S&P 500 call-option volume topped 4 million contracts on Tuesday, a record, as the benchmark closed at its first all-time high since June.

"The options market is pricing in FOMO — investors are far more concerned about missing the next leg up than protecting against a pullback," Tanvir Sandhu, chief global derivatives strategist at Bloomberg Intelligence, said.

The put/call ratio registered its third-highest reading in nearly 15 years, while total index option volume reached 8.78 million contracts, of which calls made up 4.92 million. One aggressive trade saw an investor buy 120,000 Aug. 14 SPDR S&P 500 ETF calls at a $775 strike for about $40 million in premium; the position was worth roughly $63 million by Wednesday midday.

UBS Group holds a year-end target of 8,100 for the S&P 500, nearly 5 percent above Wednesday's close, betting that earnings growth beyond mega-cap technology has yet to be priced in. Friday's official employment report is the next test for a market that has climbed 12.42 percent year to date.

Jason Coogan, an options pit trader at Simplex Trading, described the past two sessions as "a one-way flow in orders," with demand for short-dated index calls concentrated in the S&P 500 and Nasdaq. The S&P 500 edged 0.1 percent higher Thursday after slipping from its record the prior day, while the SPDR S&P 500 ETF traded at $768.56.

The rally has broadened beyond the biggest AI winners. The equal-weighted S&P 500 has reached all-time highs on 12 occasions over the same stretch, and earnings have consistently beaten already-elevated expectations, according to Scott Rubner, head of equity and equity derivatives strategy at Citadel Securities. "The market is transitioning from a liquidity-driven environment toward one increasingly dominated by fundamentals," he wrote.

UBS's Max Grinacoff said earnings growth rates this high have previously appeared only during recoveries after major market troughs. "You're starting to see a rising tide lifting all boats, including tech stocks," he said, adding that the "tech-plus" segment's potential earnings growth has not been fully priced in.

The VIX traded near its lowest level of 2026 even as implied volatility for the S&P 500 stays elevated, a dynamic Grinacoff attributed to the index's capacity for single-day gains of up to 2 percent. Strong demand for upside calls is a key factor sustaining implied volatility as equities rise, Sandhu said.

Hedge funds added to the bullish tilt, buying a net $4.8 billion of U.S. equities in the week ended July 31, the second-largest weekly purchase since 2008, according to BofA Securities data cited by The Kobeissi Letter. Health care led sectors Thursday while utilities lagged; Nvidia gained 3.7 percent and AMD fell 6.6 percent.

The 10-year Treasury yield held near 4.63 percent after ADP data showed private employers added 44,000 jobs in July, down from a revised 95,000 in June, easing pressure on the Federal Reserve to tighten further. A weaker-than-expected official payrolls number on Friday could extend the rally, though crowded bullish positioning leaves the market exposed to sharp reversals if volatility spikes.

This article is for informational purposes only and does not constitute investment advice.