Stock options signal rally hopes, less fear of downturn: Bloomberg

Stock market investors are switching from expecting losses to fearing they'll miss out on gains, hinting at optimism for a year-end rally.

The cost of bullish options (bets on the market rising) has surged to its highest level since January, according to a Bloomberg report. Market sentiment suggests that FOMO (fear of missing out) is now overtaking fear of price declines. Meanwhile, the Cboe Volatility Index sits below 17, a level associated with calmer markets. This shift reflects a change in positioning after months of risk hedging, with derivatives pricing now emphasizing the risk of being under-invested as stocks potentially climb into December.

Following a massive market sell-off earlier this year, the S&P 500 reached an all-time high of 6,693.75 on September 22.

Going into the end of the year, your 7,000 level is a lot closer than many were anticipating,

Joseph Ferrara, an investment strategist at Gateway Investment Advisers, told Bloomberg.

The stock market rally has been heavily concentrated in a few key technology companies, particularly those in the AI sector. Companies like NVIDIA and Oracle saw their shares surge after announcing new AI-related partnerships and initiatives, driving much of the S&P 500's growth. The Federal Reserve's decision to cut interest rates also played a significant role.

However, after setting new record highs on September 22, the major U.S. stock indices have since declined. As of Wednesday (September 25), the S&P 500 slipped 0.28%, the Nasdaq Composite fell 0.33%, and the Dow Jones Industrial Average declined 0.37%.

Cryptocurrencies have followed a similar pattern, declining after the September 22 rally, with their total market capitalization dropping below the $4 trillion mark.

Bulls bet big on year-end stock rally as fears fade: Bloomberg