The US equity options market has started sending an unusually strong bullish signal, with rising fear of missing out becoming a key force behind the latest move higher in stocks, according to a BlockBeats report published on Aug. 10.
Market data showed that by Aug. 4, the S&P 500 had climbed a cumulative 5.8% over four consecutive trading sessions. That rebound came after nearly three months of narrow trading, during which the index moved only 5.7% in range, well below its historical average. With tensions in the Middle East easing, oil prices pulling back, and corporate earnings staying strong, capital has moved back into US equities.
Call-option activity hits a multi-year extreme
Reuters, citing Trade Alert data, reported that the S&P 500’s average daily call-to-put trading ratio on a one-month basis rose to 0.9, the highest reading in at least four years.
Separate data from Susquehanna Financial Group showed that a gauge tracking short-term S&P 500 call skew recently climbed to a two-year high. The move suggests investors are willing to pay higher premiums to position for a sharp upside move in the near term.
Strategists say investors are more worried about missing gains
Mark Hackett, chief market strategist at Nationwide, said the buy-the-dip approach is working again and that FOMO is now showing up more clearly in market behavior. He said many of the main arguments for a bearish view have weakened, leaving investors less willing to risk missing a rally.
Steve Sosnick, chief strategist at Interactive Brokers, said FOMO never really disappeared but had not been the market’s dominant theme until now. He added that many institutional investors are more concerned about missing upside than about a decline, and are using call options as a hedge against that risk.
Strong options demand may also lift volatility
Some analysts, however, warned that extreme demand in the options market could magnify swings in equities. Garrett DeSimone, head of quantitative research at OptionMetrics, said a surge in call buying could push the VIX higher at the same time as stocks rise, a sign that part of the move may be driven by options-related technical factors.
For now, bullish positioning in US stocks is still supported by strong economic data, corporate earnings, and continued enthusiasm around artificial intelligence investment. But with equities trading near elevated levels, the market’s increasingly optimistic tone is also prompting some investors to watch for possible pullback risks.