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Goldman: Pickup in stock options volumes points to stabilization in risk appetite

Published 01/05/2024, 20:02
© Reuters.

Single stock options volumes witnessed a noticeable drop ahead of the current earnings season, signalling decreased risk appetite among both individual and hedge fund investors.

According to Goldman Sachs strategists, this trend serves as a potential explanation for the equity weakness observed in April.

Over the last two weeks, however, these strategists observed that single stock options volumes have begun to stabilize and have even shown a modest increase.

“While equities remain volatile, we believe these trends in options suggest a stabilization in risk appetite, and we no longer see these trends as likely to weigh on equity performance,” strategists said.

“In fact, they demonstrate retail and hedge fund investors have appetite to buy the weakness in equities,” they added.

Goldman said that technology stocks, particularly those heavily involved in AI, are dominating single-stock options volumes, with the likes of NVDA, TSLA, META (NASDAQ:META), SMCI, AAPL, AMD (NASDAQ:AMD), and MSFT all ranking among the top 20 in total options volume.

Specifically, NVDA options have seen significant activity, with an average daily trading volume of $132 billion notional over the past three months, representing 6.1% of its market cap, strategists highlighted.

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