The iShares Expanded Tech-Software Sector ETF (IGV) rose more than 1% on Monday, marking a significant recovery of over 20% from its lows in April and reaching its highest level since January. This uptick has led some analysts to suggest that a bull market may be underway for software stocks.
Options trading activity reflects this optimism, with traders selling nearly 28,000 puts on the ETF, indicating a bullish sentiment. Additionally, a notable $32 million trade involved purchasing 7,000 in-the-money Microsoft calls, further demonstrating confidence in the sector.
Bank of America analyst Tal Liani's reinstatement of coverage on ServiceNow with a buy rating and a $130 price target contributed to a 9% surge in its shares, prompting options traders to buy over 85,000 calls. Even Salesforce, which was rated as 'underperformed,' saw a 3.5% increase.
While many software stocks remain below last year's highs, the cybersecurity segment, represented by Amplify's cybersecurity ETF 'HACK,' has shown resilience, gaining 16% since April 20. Despite the recent rally, the IGV is still down 12% year-to-date, reflecting the ongoing concerns about a potential 'SaaSpocalypse' where AI could disrupt traditional software companies