On Thursday, chip stocks fell by 1.5%, yet the broader U.S. stock market remained resilient, with the Dow Jones Industrial Average closing up 2% and setting a new record. The S&P 500 also rose by 0.4%, buoyed by advances in 9 of its 11 sectors, particularly health care.
Options trading reflected this optimism, especially in the State Street Health Care Select Sector SPDR ETF (XLV), where traders bought approximately 5,300 calls compared to just over 1,000 puts. Notable performers in the health-care sector included Humana and Centene, both reaching new one-year highs, while UnitedHealth Group approached its own one-year high.
Options activity was particularly strong in UnitedHealth, with 87% of the $135 million in options premium linked to calls. Eli Lilly also saw a significant rally, gaining over 4% and drawing heavy call buying, with over 10,500 calls purchased.
In contrast, the financial sector, which also experienced a rally, showed mixed options trading, with nearly 380,000 options traded but a more balanced split between calls and puts. This divergence in options activity highlights the market's focus on health-care stocks as potential leaders moving forward