Option traders "switching from defense to offense"! They are making big bets that the rebound in US stocks will continue.

For stock options traders, greed has firmly replaced fear, as they are buying bullish positions, betting that the US stock market will continue its momentum from the lows of last month. In the US securities exchanges, the ratio of bullish options to bearish options trading volume is hovering at the highest level since February 18, the day before the S&P 500 index hit its previous high. Meanwhile, according to data from Susquehanna International Group, the options market also reflects increasing confidence that the S&P 500 index will rise to 6150 points in September. This shift in market sentiment is in stark contrast to last month, when economic and political worries caused by tariffs put the US stock market on the brink of a bear market, prompting traders to hedge against further declines. However, as tensions ease between the US and China, and with April inflation data in the US coming in lower than expected, the market's worst fears have not materialized, leading options traders to bet on further gains in the US stock market. RBC Capital Markets' derivatives strategy head, Amy Wu Silverman, said, "Compared to the panic during the previous decline, the market is now more worried about missing out on the rally." Another bullish signal comes from the Chicago Board Options Exchange Volatility Index (VIX). According to data from Bespoke Investment Group, the index dropped from 40 to below 20 in just 21 trading days, marking the fastest decline in history. In the four previous instances where the VIX dropped from 40 to below 20 in less than 100 trading days, the S&P 500 saw gains in the following 1 month, 3 months, 6 months, and 12 months. The continuous rise in the "animal spirit" of the options market reflects a growing belief that the market can withstand the economic impact of the trade war in the short term. However, there are still differences of opinion. In the long term, it is still unknown whether this optimism can be sustained, as trade negotiations are ongoing and corporate earnings guidance remains at low levels in recent years. Options strategists at 22V Research and other institutions like Bank of America advise investors to continue holding downside hedge positions. Brent Kochuba, founder of options research firm SpotGamma, predicts resistance for the S&P 500 index between 5900 and 6000 points. He said that a large number of bullish options expiring on Friday "could lead to a short-term market pullback next week." Vishal Vivek, stock and derivatives trading strategist at Citigroup, believes that systemic hedge fund buying will provide support for the stock market in the coming weeks. He added that these funds have been on the sidelines, waiting for buy signals, and that "the level of panic has clearly decreased over the past month, encouraging investors to re-enter the market."