Stock Traders Turn to Options for Desperate Chase to Catch the Tech Rally

Stock investors who planned for one thing in 2023 are getting something else entirely. Now, with the tech-obsessed market at risk of running away from them, the race is on to catch up.

Professional and retail traders alike are rethinking views on computer and software shares with the Nasdaq 100 up 31% since December. Among those stung into action are managers who earlier cut holdings in Apple Inc. and the six other biggest tech stocks by the most in almost three years. ETF investors are similarly wrong-footed after pulling about $3 billion in the past five months from the Invesco QQQ Trust Series 1 (ticker QQQ), the largest exchange-traded fund tracking the Nasdaq 100.

With the seven tech behemoths surging a median of 44% this year — a gain almost five times that of the S&P 500 — there are signs traders are getting desperate for ways to keep up. It’s visible in the options market, where the expected volatility rose alongside the Nasdaq 100 and the cost of bullish options spiked.

“There’s FOMO in the tech space,” said Brent Kochuba, founder of options platform SpotGamma. “It’s a clear chase.”

Spot Up, Vol Up | Sync gains in Nasdaq 100 and its implied volatility show angst over upside risk