Over the past week, options traders put more money into bullish bets on megacap growth stocks like Nvidia Corp. than at any other time since the peak during the pandemic.
Trading in bullish call contracts was about 4.5 million contracts higher than trading in bearish puts over the five days ending on Friday, according to data from the Options Clearing Corp. that Deutsche Bank shared in a research note on Friday.
The crazy options trading was part of a bigger shift in how investors are positioning their money: traders are favoring technology stocks more and more, especially megacaps like Nvidia NVDA, -3.22% and Apple Inc. AAPL, -1.04%. In the week that ended on Wednesday, a record amount of money came into technology funds.
Most of the S&P 500’s record highs in 2024 have been caused by megacap growth stocks, such as Eli Lilly & Co. LLY, -0.24%, which are not in the technology sector. This has made some investors worry that the market might be becoming too dependent on a few companies.
SpotGamma data shows that before Friday’s “triple witching” expiration, the most popular options were calls tied to Nvidia. This was even more popular than contracts tied to the S&P 500 and the popular ETF SPY that tracks the benchmark index.
See: Nvidia’s rally faces its latest test on Friday, when the record-setting “triple witching” options expire.
FactSet data shows that Nvidia alone was responsible for about a third of the S&P 500’s rise in June before Thursday’s selloff. The IT sector of the S&P 500 (XX:SP500.45) is up almost 10% so far in June, while Nvidia has gained more than 15% and is now worth $126.57 as of Friday’s close. The chip designer did a 10-for-1 stock split earlier this month, which seemed to get more people interested in the stock.
The S&P 500, on the other hand, closed Friday at 5,464 and has gained 3.6% this month.
