AI tech rally masks ‘violent rotations’

Silverman says the rush to tech has driven demand for call options higher than that for bearish puts as investors increasingly use derivatives as a way to place big bets on tech. — Bloomberg

NEW YORK: A handful of megacap technology stocks have propped up equity markets for the past several weeks as hype surrounding artificial intelligence (AI) lures in sidelined investors. But the fear of missing out on the rally is becoming cause for concern in the options market, says RBC Capital Markets’ head of derivatives strategy Amy Wu Silverman.

The Nasdaq 100 index is up about 30% this year thanks to heavier weights in seven stocks: Apple Inc, Microsoft Corp, Alphabet Inc, Amazon.com Inc, Meta Platforms Inc, Tesla Inc and Nvidia Corp –the sole chipmaker in the group which is nearing US$1 trillion (RM4.6 trillion) in market capitalisation.