Hedgers have given up. Retail is now in.
The last time call-buying ran this hot, traders were sitting at home with stimulus checks.
New data from Cboe shows traders are buying calls on the "Mag 10" basket at the fastest 10-day pace since 2021. Calls are options that pay off when a stock goes up.
The basket pulls in the seven biggest tech names plus AMD, Palantir, and Broadcom.
Of the new positions opened, 52% were call buys. Only 17% were call sales. That is a wide gap.
Mandy Xu, the head of options data at Cboe, said the simplest read is that hedgers have given up and are chasing the rally.
A month ago this same call-buying gauge sat 15 points lower. Back then investors were more focused on the Middle East and oil prices. The shift since has been close to straight up.
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The Nasdaq-100 set a new record on Monday. It is up more than 16% this year.
Chip stocks alone now make up close to a fifth of the S&P 500's total market value. That is a big share of the U.S. market in one slice.
The price of upside calls on the Nasdaq-100 sits at a 52-week high. It is near a three-year peak. That is from Nations Indexes.
Scott Nations, the firm's president, said the more telling read is the lack of sellers. Almost nobody is willing to write covered calls on the index. That is the move you make when you think the rally is tired.
On the single-stock side, Cboe's gauge of stock-by-stock swings versus the broader VIX is sitting in its 98th percentile. The action is in names, not the index.
Robinhood data backs it up. The most-traded names on the platform this year include Nvidia, Tesla, Micron, Sandisk, AMD, and Microsoft.
Costco, UnitedHealth, and Alibaba are being sold to fund those buys. The cash is rotating out of laggards and into the names that already led.
Steve Quirk, Robinhood's chief brokerage officer, said retail has long had faith in tech and tends to add on dips. This year is no exception.
The thing to watch is what happens if the rally pauses. With hedgers out and call-buying this hot, a pullback could move faster than usual.
That is the trade-off of a one-way bet. The upside is loud while it lasts, but the downside has no built-in buffer.
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