The S&P 500 has reached a new all-time high this summer despite extreme volatility in individual stocks, including a 25% decline in the semiconductor sector. Traders purchased more put contracts on the VanEck Semiconductor ETF (SMH) than at any other point in its history. In August, the market firmed up with extremely bullish positioning on Nasdaq options, with Cboe recording an all-time high in call option trading. According to Cboe, traders are still holding deeply out-of-the-money puts as crash protection, with the ratio between 10-delta and 25-delta puts at the 66th percentile over five years. Russell 2000 volatility has fallen below 17, a 2nd percentile low over five years, with traders viewing small-caps as a volatility safe haven.
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