The S&P 500 rose nearly 2% after the midterm elections, recovering from previous losses. This rally was accompanied by a notable decline in the Cboe Volatility Index, which fell about four points to below 17, marking its largest one-day drop since July. Energy stocks, however, faced a downturn, dropping 5.6% as crude oil prices fell below $90.
This led to increased options activity in the State Street Energy Select Sector SPDR ETF (XLE), where bearish put-buying dominated, indicating a cautious outlook for the sector. Conversely, consumer discretionary stocks saw a nearly 5% increase, although options volume remained below average.
Notably, Rocket Companies experienced a surge in options trading, with 90% of the 110,000 options traded being calls, suggesting strong bullish sentiment. In the solar sector, the Invesco Solar ETF (TAN) rose 9%, with options volume significantly above average and a majority in calls, reflecting optimism.
On the tech front, the VanEck Semiconductor ETF (SMH) saw bearish options flows, with a 2.6% decline and a majority of options being puts, indicating a negative sentiment among traders