The iShares Expanded Tech-Software ETF (IGV) has seen a remarkable 35% increase from its April low, reflecting a strong recovery in software stocks that has now escalated into a bull market. On a recent trading day, the ETF experienced a 5% rally, largely fueled by double-digit gains in major software firms such as ServiceNow and Workday.
Traders are actively engaging in bullish options strategies, with trading volumes exceeding five times the daily average over the past month. Specifically, over 50,000 call options were purchased for IGV, compared to just under 6,000 puts, indicating a strong preference for bullish bets. Notably, call option volumes for ServiceNow, Salesforce, and Oracle also outpaced puts by a factor of five.
The total options trading in IGV surpassed that of the semiconductor ETF SMH, with $120 million of the $140 million in IGV options being call contracts. Dan Deming, managing partner at KKM Financial, noted the dramatic nature of the market's movements and expressed an expectation for continued mean reversion favoring software over semiconductors.
While some traders are hedging their positions with spreads, significant call sales were also observed, including multi-million-dollar trades on 90-strike calls expiring in December. The June 18 105-strike call was the second most popular contract, requiring a modest 5% price increase to break even