This week, the S&P 500 index surged to a historic peak, closing up 0.6% on Friday and marking a total weekly gain of 3.6%. The Cboe Volatility Index (VIX) fell to its lowest level since January, reflecting reduced market anxiety. Notably, options trading reached unprecedented levels, with over four million S&P 500 index calls traded on Tuesday alone, surpassing the previous record by 10%.
The trading activity was characterized by a significant volume of zero-day-to-expiry call options, which accounted for 2.4 million trades. The put-to-call ratio dropped to 0.83, indicating a bullish sentiment among traders. Open interest in S&P 500 options ended the week at 27.4 million contracts, with calls representing a high concentration, suggesting potential support levels for the market.
The State Street SPDR S&P 500 ETF Trust (SPY) saw notable interest at the 760-strike level for puts and the 785-strike for calls, indicating key price points for future trading. Additionally, semiconductor stocks rebounded sharply, with the iShares Semiconductor ETF (SOXX) rising over 7% and the Corgi Lithography & Semiconductor Photonics ETF (EUV) gaining 13%.
This rally was further supported by a halt in the rise of the 10-year Treasury yield at 4.7%. Analysts predict a robust 47% growth in S&P 500 earnings for the second quarter, the highest since the post-COVID rebound in 2021, underscoring the positive outlook for the market