S&P 500 Futures Hit All-Time Highs Amid Narrow Market Breadth

S&P 500 futures are trading at all-time highs, but an aura of concern is lingering among investors trying to make sense of extremely low breadth in the U.S. stock market. On the New York Stock Exchange Tuesday, 75 stocks made new 52-week lows, versus just 14 names making new highs.

Options traders who are piling into bullish positions in both indexes and key stock leaders are sending a clear message: Just wait.

Monday's rally in stocks was so strong that there are signs even institutional market-makers were caught offsides and had to buy upside calls to keep up with momentum, as the volume ratio of calls to puts climbed to the highest since May, and for the State Street SPDR S&P 500 ETF Trust (SPY), the highest since the first week of August, according to Barchart data.

The same goes for the Invesco QQQ Trust (QQQ), with the ratio of calls to puts hitting the highest in at least a year. The odds that the Nasdaq 100 touches a new high by the end of the week are now more than 67%, according to options pricing on trading platform ThinkOrSwim.

Options pricing in the key tech leaders driving this latest market rally exudes a bullish bias as well, with market-makers pricing in new records for stocks like Meta Platforms, Intel and Micron before the end of the year. Traders can assess these odds by taking a given options contract's delta — its responsiveness to changes in price — to extrapolate the chance the underlying stock will touch the contract's strike price before a given date.

In Meta, where options volume on the week is upward of four times the 30-day average, implied volatility is higher for calls than puts across the options term structure, Barchart data shows. There's a 52% chance the stock touches $790, its closing high from last year, by Oct. 2, according to ThinkOrSwim pricing.

Intel, now up 35% in the past month, is the latest leader of the semiconductor trade and boasts an implied volatility of 69 as options trading picks up in the one-time laggard of the AI trade. Market-makers are assigning roughly a coin-flip chance that it reaches above its closing high of roughly $140 between now and Oct. 30.

The big addition to the rally on Tuesday is a 2% advance in memory stocks tracked by the Roundhill Memory ETF (DRAM). Shares of Sandisk rose more than 6%, and shares of Micron gained more than 3%.

Options pricing points to a new high in Micron by Oct. 23, and for Sandisk by Dec. 18. For the DRAM ETF, whose implied volatility has plunged since this summer, market-makers are pricing just a 34% chance of a new high by Dec. 18.