The largest IPO in history is "swallowed up": VIX drops below 16, and panic on Wall Street quickly recedes.

In just 10 trading days, the market sentiment completed a dramatic reversal from "panic selling" to "enthusiastic buying". With SpaceX's massive IPO of nearly $2 trillion being smoothly digested by the market, the VIX fear index has plummeted from high levels to below 16, with funds flowing back into risk assets like Kingenta Ecological Engineering Group. This largest IPO in history not only did not suck up liquidity, but instead became a catalyst for the market - with US stocks strengthening across the board, the semiconductor sector reaching new highs, and the intensive trading of VIX put options implying that the market is betting on further volatility decline. Fear index plunges: VIX drops from high levels to below 16 Just 10 days ago, tech stocks were in freefall, with the US stock market experiencing its worst single-day performance since October 2025. The Cboe Global Markets Inc Volatility Index (VIX), Wall Street's most famous "fear gauge", soared rapidly, breaching the 20 mark, partly due to investor concerns about whether the market could absorb the impact of the massive SpaceX IPO. Now, with the largest IPO in history being smoothly absorbed without causing any ripples, investors are pouring back into stocks that were previously sold off. The Wall Street "fear index" has fallen below long-term average levels, with VIX dipping below 16 on Monday. Ed Tom, Senior Director of Derivatives Market Intelligence at Cboe, pointed out in a report to customers, "Despite a modest 0.7% increase in the S&P 500 index last week, the decline in the VIX index far exceeded expectations, primarily due to significant unwinding of protective hedges over the next 12 months and downward convexity positions." In other words, "insurance" bought previously to guard against a market crash is being unwound in large scale, with funds flowing back into risk assets. The largest IPO swallowed in one gulp The core catalyst for this turnaround in sentiment is SpaceX's epic IPO. This issuance set historical records, absorbing nearly $2 trillion in new shares (including secondary market trades). SpaceX's stock price rose another 13% on Monday, with a market value approaching $2.5 trillion, surpassing Saudi Aramco to become the world's third-largest listed company by market value, behind only Apple Inc. and NVIDIA Corporation. Previously, investors were generally concerned that such a massive supply of new shares would dry up market liquidity and put pressure on tech stock valuations. But the opposite has happened - the IPO landed smoothly without causing any ripples, instead sparking even stronger buying interest. Previous bearish traders had claimed that "speculative funds had run out of steam", but the nearly $2.5 trillion market cap has left the bears speechless, forcing short positions to cover and further boosting the stock indices. Buoyed by the smooth absorption of the SpaceX IPO, all three major US indices strengthened on Monday: the Nasdaq 100 Index surged 3%, leading the major indices. The S&P 500 Index closed up about 1.7%, nearing the historical high set earlier this month. The VanEck Semiconductor ETF (SMH) skyrocketed over 4%, reaching a new all-time high, fully recovering from the over 10% decline since June 5. Put options dominate VIX, but is it really a bullish signal for the stock market? While options flow in chip stocks still shows significant hedging activity, trading around VIX points to a more bullish stock market outlook. According to ThinkOrSwim data, put options on VIX traded more than call options on Monday, with the volume of put options almost equaling that of call options. SpotGamma data shows that out of the $93 million options premium traded, over $70 million is related to put options. The largest contract traded was the put option with a strike price of 16 expiring on Wednesday, with a total of 46,000 contracts traded. This indicates that the market is collectively betting on "volatility continuing to decline", which is a typical setup for a bullish stock market. As for SMH, options flow has been consistently leaning bearish for weeks, even as the semiconductor sector has reached new highs. Given the unprecedentedly high weighting of semiconductors in the current stock indices, the sharp volatility this month may prompt investors to pay a higher cost for hedging. While about 60% of the options premium on SMH is concentrated in put options, there are also significant sellers of put option spreads in the market. This includes the largest trader of the day, who made a profit of $5 million by selling a large put option spread expiring on July 17, and later spent $2.7 million to buy a 600/550 put option spread expiring on the same day. It is worth noting that on Tuesday, options traders will have a new trading instrument - SpaceX options will officially debut. Looking back at history, Tesla, Inc. options have long been a favorite among retail traders, consistently ranking among the most active individual stock derivatives. The market widely expects that SpaceX options will replicate this popularity, becoming a new battlefield for volatility trading and leveraged speculation.