Tech bulls lose conviction as key trading metric blows out to the widest since 2008

• The spread between 25-delta puts in the Nasdaq 100 versus S&P 500 reached 13.6 points, up from just 3 in mid-March and matching levels last seen during the 2008 financial crisis at 13.3 points
• Semiconductor ETF (SMH) fell 4.5% to below $592, returning to levels first reached in late May after more than a month of sideways trading
• Call-buying appetite has dropped sharply, with one-standard-deviation out-of-the-money Nasdaq calls falling from the 99th percentile in May to the 58th percentile currently

Tech Bulls Lose Conviction as Key Trading Metric Blows Out to Widest Since 2008

Summary

The spread between Nasdaq 100 one-month implied volatility (at 28) and S&P 500 volatility (below 16) has reached near-record highs, approaching levels last seen in September 2008. This widening gap signals deteriorating confidence among tech investors as market dynamics shift from bullish optimism to defensive positioning.

Key Market Shift: Unlike earlier in the year when elevated volatility reflected call-buying euphoria, the current surge stems from increased demand for protective put options. The spread between 25-delta put implied volatility for the Nasdaq 100 versus the S&P 500 has jumped from 3 points in mid-March to 13.6 points—matching 2020 levels and exceeding anything outside the 2008 financial crisis.

Deteriorating Momentum: AI and semiconductor stocks, which previously drove consistent upside speculation, are losing steam. The VanEck Semiconductor ETF (SMH) dropped 4.5% on Thursday to $592, revisiting levels first reached in late May. The Nasdaq 100 itself declined 1.84% to 29,260.

Nuanced Picture: While put-buying has intensified, call demand remains elevated historically. Prices for one-standard-deviation out-of-the-money Nasdaq calls sit in the 58th percentile, down from the 99th percentile in May per Nations Indexes' CallDex, suggesting speculative positioning hasn't fully collapsed.

Seasonal Factor: Analysts note that typical summer seasonality may be suppressing S&P volatility while tech continues experiencing elevated swings, partially explaining the spread widening.

Bottom Line: The historic volatility divergence reflects waning conviction among tech bulls and growing hedging activity, signaling potential downside risks for high-flying technology names after months of concentrated gains.