Vote with real money! The options market is betting on the US stock AI market is far from over

Is the rise in artificial intelligence stocks coming to an end? Options traders have already judged this, and their answer is a clear negative, at least not over in the short term.

The Zhitong Finance App notes that this judgment is particularly evident in the derivatives market. The number of open call options contracts in the Big Seven shares of the tech giant compared to the ratio of put options is close to the highest level since March 2023, indicating that traders are preparing for a further rise in stock prices.

This data may help ease market concerns. Currently, as more and more strategists express cautious views on the future of technology stocks, investors are beginning to worry about whether the gains in technology stocks that have driven the S&P 500 index to rise 27% since the beginning of April have peaked. Although concerns about AI valuations and spending plans remain, options traders expect the upward momentum to continue until at least January next year.

Matt Marley, chief market strategist at Miller Tabak + Co., said: “Buying technology hedges at the end of the year has been a waste of money for the past year or two.” If the market rises strongly before the end of the year, whether people are bullish or bearish, they must buy stocks.” He meant institutional traders.

Investors' confidence in tech giants appears to be growing

Optimism surrounding AI technology has driven the “Big Seven” index up 25% this year, making Nvidia the first company to reach a market capitalization of $5 trillion in the process. The seven biggest tech companies, including Meta Platforms and Microsoft, accounted for most of this year's stock market gains.

Although some people have expressed concerns about the unsustainable overvaluation of technology, the expectation that the Federal Reserve will cut interest rates on Wednesday allayed some concerns. According to data compiled by Cboe Global Markets Inc., indicators to measure the expected volatility of technology stocks in relation to the general market have fallen from a one-year high of 8% to 4% in the past two weeks.

On the buyer side, investors also echoed this view: Of the 39 global investment managers interviewed, most said the valuation of the “Big Seven” stocks had not inflated excessively. They believe fundamentals support this deal and mark the beginning of a new industrial cycle.

On Tuesday, the “Big Seven” index rose 0.3%, its 10th day of increase in 12 trading days, while the S&P 500 index fell 0.1%. Futures market pricing shows that interest rates are 88% likely to be cut later today. Investors are closely watching Federal Reserve Chairman Powell's press conference to get clues about future interest rate decisions.

Optimism about the wider market also appears to be rising. According to Mandy Xu, head of derivatives market intelligence at Cboe Global Markets Inc., investor demand for S&P 500 bullish options has increased over the past two weeks, and bullish contracts are more attractive than bearish contracts.

Not everyone is bullish, though. IUR Capital's managing director Gareth Ryan is preparing for a market pullback early next year.

“The first few months of 2026 are likely to retest the low of 6,500 points,” he said on the phone.