The Nasdaq-100 has risen 15% since its July low and is currently 2% above its previous record from June. The S&P 500 has also returned to an all-time high after grappling with rising interest rates. However, this resilience is overshadowed by notable bearish options activity.
A significant trade in the State Street SPDR S&P 500 ETF Trust (SPY) involved a 100,000-lot put spread costing $44 million, indicating a bearish outlook that profits if the SPY drops to $500, a 35% decline from current levels. Brent Kochuba from SpotGamma noted that these March options are the cheapest they've been in 90 days, suggesting that traders are hedging against potential downturns.
This put spread was the largest trade in SPY on a day when overall options volume exceeded the 30-day average by more than 20%. Additionally, a large trade in Meta options involved buying back $89 million of 560-strike calls while selling $69 million of 700-strike calls, which raised questions about the strategy being employed.
John Rowland from Barchart pointed out that the bearish sentiment in SPY contrasts with the overall bullish tone in options trading, particularly among retail investors, while Meta's sentiment appears negative