U.S. equity index futures are trading near record levels, but the advance remains concentrated in a small group of stocks. On Sept. 22, just 14 stocks listed on the New York Stock Exchange reached 52-week highs, while 75 hit 52-week lows. At the same time, call-option activity in major indexes and selected technology leaders has picked up, suggesting the options market is pricing in a possible extension of the rally to more individual stocks.
Call Options Surge on the S&P 500 and Nasdaq 100
U.S. stocks posted a relatively strong gain on Monday, potentially leaving some market makers needing to buy call options to hedge exposure to a rapid move higher. Barchart data showed that the market-wide ratio of call-option volume to put-option volume rose to its highest level since May. For the SPDR S&P 500 ETF (SPY), issued by State Street, the ratio also reached its highest level since the first week of August.
Call options accounted for a similarly high share of trading in the Invesco QQQ Trust (QQQ), reaching at least a one-year high. Options pricing on ThinkOrSwim implied a probability of more than 67% that the Nasdaq 100 would reach a new high before the end of this week. The figure reflects current options-market pricing and does not mean the index will necessarily reach that level.
Meta Options Volume Tops 30-Day Average by Fourfold
Options pricing has also turned more bullish around several large technology companies that have helped drive the recent market advance. Market makers are pricing the possibility that Meta Platforms, Intel and Micron will set new record highs before year-end. Traders commonly use an option’s delta—the sensitivity of its price to a move in the underlying asset—to estimate the likelihood that a stock will reach a given strike price before expiration.
Meta’s options volume this week has exceeded its 30-day average by more than four times. Barchart data showed that, across different expiration months, implied volatility for Meta calls was higher than for puts. ThinkOrSwim pricing indicated a 52% probability that Meta shares would reach $790 by Oct. 2. That level was the stock’s closing high last year.
Intel Shares Gain 35% in a Month
Intel has emerged as one of the semiconductor sector’s leading performers, gaining 35% over the past month. As the stock—once viewed as a laggard in the artificial-intelligence trade—has regained investor attention, its implied volatility has risen to 69. Market pricing put the probability of Intel closing above its approximate closing high of $140 by Oct. 30 at roughly 50%.
That price is also a key level in current options trading. Higher implied volatility indicates that the market expects larger share-price swings ahead, but by itself does not establish whether the move will be higher or lower.
Memory Stocks Rise as Options Pricing Diverges
Memory-chip stocks provided fresh momentum on Tuesday. The Roundhill Memory ETF (DRAM), which tracks the sector, gained 2%, while SanDisk rose more than 6% and Micron advanced more than 3%.
Options pricing indicated a relatively high probability that Micron would reach a new high by Oct. 23, while SanDisk was priced for a potential new high by Dec. 18. By contrast, implied volatility for the DRAM ETF has fallen noticeably since the summer. Market makers assigned just a 34% probability to the fund reaching a new high by Dec. 18.
The combination of stronger index futures and weak market breadth indicates that the current advance is still being driven mainly by selected large technology and semiconductor stocks. Call volume and implied probabilities show traders’ positioning and expectations, but a broader rally would require more stocks to participate and would also depend on how volatility develops.