Tech volatility gap with S&P 500 reaches widest since 2002
Options tied to the Nasdaq 100 show rising anxiety after a 30% rally and renewed doubts over AI spending payoffs.
By Daniel Okafor · Business Editor
3 min read
Volatility in Nasdaq 100 options has climbed to its highest level versus the S&P 500 gauge since 2002, Fortune and Bloomberg reported, showing investors are paying up for protection after a sharp run in technology shares. The widening gap points to rising concern that the AI-led trade has become crowded and more prone to sudden swings.
The Cboe NDX Volatility Index, which tracks expected price moves in the Nasdaq 100 through options prices, has risen through the year and is near 27, according to Fortune and Bloomberg. Relative to the Cboe VIX Index, the comparable measure for the broader S&P 500, that is the highest reading since the aftermath of the dot-com bust, they reported.
The broader market has looked calmer than its technology-heavy corner. Fortune and Bloomberg said worries have built around crowded positioning in the Nasdaq 100 after the index rose 30% from late March.
Maxwell Grinacoff, head of U.S. equity derivatives research at UBS Group AG, called the scale of the move in technology volatility “pretty astounding,” according to Fortune and Bloomberg.
The nervousness showed up Tuesday as the Nasdaq 100 fell 1.3%, while the S&P 500 lost 0.2%, Fortune and Bloomberg reported. The drop came as investors questioned how quickly large artificial-intelligence spending will translate into returns.
The moves have been persistent. Fortune and Bloomberg said the Nasdaq 100 rose 1.3% on Monday, marking its sixth straight session with a move of more than 1% in either direction, the longest such stretch since August 2024. Bloomberg data cited in the report put the index’s realized 30-day volatility at 29.7, its highest level since the period after Donald Trump’s tariff rollout a year earlier.
Another factor is Space Exploration Technologies Corp., which was set to enter the 100-member Nasdaq index on Tuesday, according to Fortune and Bloomberg. Amy Wu Silverman, head of derivatives strategy at RBC Capital Markets, told clients that newly listed companies tend to swing more than mature public companies, and said SpaceX’s size could keep the volatility spread between the Nasdaq 100 and S&P 500 wide until SpaceX is also added to the S&P 500.
Fortune and Bloomberg also reported that one investor appeared to trade directly around SpaceX’s index inclusion last week, spending $2 million for the right to buy 1 million shares at $330.
AI and semiconductor shares have also seen sharper moves because of leveraged exchange-traded funds in the U.S. and Asia, Fortune and Bloomberg reported. Grinacoff said his late-2025 call that Nasdaq 100 swings would exceed S&P 500 swings remains in place, and said traders can express that view by buying Nasdaq 100 puts and calls while selling similar S&P 500 contracts.
At RBC, Silverman said clients have been stepping back from the AI trade and shifting toward sectors such as health care and consumer staples, according to a client note cited by Fortune and Bloomberg. RBC’s equity sales team recommended buying puts on the Invesco QQQ Trust Series 1 ETF and the VanEck Semiconductor ETF for investors seeking bearish technology exposure.
Bloomberg data also showed Nasdaq 100 stocks moving more closely together than S&P 500 stocks over the past month. Grinacoff said that pattern suggests the AI trade is more crowded than the broader market, while active managers across several strategies have become more committed to equities.
UBS warned that could leave less institutional buying power available if stocks fall and confidence in AI names fades, according to Fortune and Bloomberg. A UBS model built to forecast VIX moves over the next month is near a 10-month high and just below a level that signals the VIX is likely to rise, they reported.
This story draws on original reporting from Fortune.