Nasdaq 100 options surge signals rare bullish turn in U.S. tech stocks

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Nasdaq 100 options bullish turn

Highlights

Out-of-the-money QQQ call options leap 42% on Tuesday as bearish bets unwind, marking one of the 10 most bullish Nasdaq 100 days in a decade.
Nasdaq 100 rallies 3.3% to 29,733, with options volumes this month running 18% above July, reflecting robust investor engagement after earnings and FOMC rate stability.
S&P 500 second-quarter earnings are on track for 47% growth, pushing the RSP ETF up 1.4% and extending its year-to-date lead over the S&P 500.

Options activity marks a powerful shift

As reported by CNBC, bullish options activity tied to the Nasdaq 100 accelerates sharply on Tuesday as investors rush to cover short positions and buy upside exposure in major technology stocks.

The price of one-standard-deviation out-of-the-money QQQ call options, contracts with an implied 16% chance of success, jumps 42% on Tuesday, according to Nations Indexes. Scott Nations, president of Nations Indexes, says pessimists capitulate and that the session ranks among the 10 most bullish days for the Nasdaq 100 in the past decade.

The Nasdaq 100 rises 3.3% to 29,733, leaving the index within 3% of its June 3 record after having fallen more than 10% intraday through last Wednesday. Nasdaq says options volumes this month are tracking 18% above July's pace, with Kevin Davitt from the exchange pointing to stronger investor participation after earnings momentum and post-FOMC stabilization.

Broader U.S. equity derivatives also reflect the shift in sentiment. The same out-of-the-money call-pricing measure for SPDR S&P 500 Trust options posts its seventh-largest jump in three years, while the VIX rises alongside stocks, a less common pattern that data compiled by CNBC and Convex Asset Management shows happens about 20% of the time.

Earnings and cross-market moves support rally

Support for the rally extends beyond large-cap technology. Treasury yields fall, crude oil drops below $80 after President Trump suggests a deal with Iran is nearing, and gains spread into materials and industrial shares.

Investors are also reassessing bearish arguments about stretched valuations as profit growth remains strong. FactSet data shows S&P 500 earnings are on pace to grow 47% in the second quarter, the fastest rate since the rebound from Covid in 2021, while the forward 12-month price-to-earnings ratio stands at 19.6, below the five-year average.

Market breadth improves as the rebound widens. The Invesco Equal-Weight S&P 500 ETF RSP adds 1.4%, taking its year-to-date gain to 14% and slightly ahead of the S&P 500's 13% advance.

Our earlier coverage of the S&P 500’s record-high breakout explained how Tuesday’s surge was fueled by a mix of geopolitical optimism, strengthening earnings expectations, and technical momentum. We noted that tech-led strength—especially in semiconductors and software—helped broaden the rally, while a confirmed break above key resistance could improve August sentiment and support rotation back into megacap and growth stocks.

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