Cboe index data show U.S. equities retreat in October as volatility rises

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U.S. equities retreat in October

Highlights

S&P 500 Index declined 0.9% to 7,580.07 in October as VIX Index surged 18.9% to 19.42, highlighting a rise in broad market volatility.
Cboe Magnificent 10 Index fell 5.9% in October, signaling concentrated weakness in top technology names despite a 15.9% year-to-date gain.
Defensive and rate-sensitive strategies outperformed with the Cboe TLT 2% OTM BuyWrite Index up 5.8%, while the Cboe Bitcoin ETF Index dropped 8.3%.

October index moves across equities and volatility

As reported by Cboe, citing Cboe Global Markets, the S&P 500 Index falls 0.9% in October to 7,580.07 after touching highs near 7,819 on October 6, leaving the benchmark up 10.7% year-to-date. The Russell 2000 Index edges up 0.5% to 2,811.84, taking its year-to-date gain to 13.3%, while the Cboe S&P 500 Equal Weight Index rises 4.9% and lifts its year-to-date advance to 13.9%.

The Cboe Magnificent 10 Index drops 5.9% to 513.31, although it remains up 15.9% year-to-date, indicating that October's retreat is concentrated in the largest technology names after a period of outperformance. Measures of market stress also increase, with the VIX Index climbing 18.9% from 16.34 to 19.42 and the Cboe S&P 500 Three-Month Volatility Index rising 13.1% to 20.78.

Implied correlation moves higher as well. The Cboe One-Month Implied Correlation Index jumps 48.6% to 13.51 and the Six-Month Implied Correlation Index gains 34.2% to 16.52, while the Cboe S&P 500 Constituent Volatility Index rises 6.2% and the Cboe VIX of VIX Index advances 18.9% to 106.43.

Strategy performance and broader market implications

Options-income strategies are mostly flat to slightly lower in October as higher premiums offset weaker underlying prices. The Cboe S&P 500 BuyWrite Index slips 0.2%, the Cboe Validus S&P 500 Dynamic Call BuyWrite Index is flat, and the Cboe S&P 500 PutWrite Index gains 0.4%.

Russell-linked options strategies post firmer results, with the Cboe Russell 2000 PutWrite Index up 1.4% and the Cboe Russell 2000 Daily Covered Call Index up 1.0%. The Cboe TLT 2% OTM BuyWrite Index leads the group with a 5.8% gain, suggesting some defensive or rate-sensitive strategies outperform as broad equity momentum fades.

Crypto-linked benchmarks reverse part of the previous month's strength. The Cboe Bitcoin ETF Index falls 8.3%, leaving it down 12.6% year-to-date, while the Cboe Bitcoin ETF Volatility Index rises 14.8% to 47.51.

Our earlier analysis of the S&P 500 (SPX) highlighted a pullback even as technology and AI-linked stocks rebounded on major earnings, with rising Treasury yields pressuring other sectors. We also noted that SPX was trading below key 20- and 50-day moving averages, pointing to broader selling pressure and a likely near-term consolidation range around closely watched support and resistance levels.

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