The S&P Is Now Lower For the Year. What Do Options Say Is Next?

The Weekly Takeaway:

• The S&P 500 lost 1.39% this week. It is now down 0.14% for the year. The biggest names in the index were weakest as illustrated by the index losing ground but 53% of the individual constituents gaining ground for the week;
• The Nasdaq-100 lost 1.37% this week after losing 1.87% during the previous week as everything AI and software related remained under pressure. The Nasdaq-100 is now down 2.05% for the year;
• S&P 500 VolDex (ticker VOLI) gained 17.06% this week and closed at 16.95. Friday’s close is the 20th percentile of the 52-week range;
• S&P 500 TailDex (ticker TDEX) rose by 24.79% this week and closed at 17.87. That is the 25th percentile of its 52-week range;
• S&P 500 CallDex fell by 7.98% after falling 4.51% and 7.37% during the previous two weeks respectively. It closed this week at just 11.69 which is the bottom of its 52-week range and just the 9th percentile of its 10-year range. Traders continued to sell the out-of-the-money calls represented by CallDex to get short exposure to the S&P 500 as prospects for a rally continue to fade;
• S&P 500 RiskDex rose by 29.08% to end the week at 6.84, the 98th percentile of its 52-week range. RiskDex measures the ratio of PutDex (normalized price of 1 standard deviation out-of-the-money puts) to CallDex (normalized price of 1 standard deviation out-of-the-money calls). Thus it is a measure of both option skew and fear or greed. It is signaling substantial fear. You can learn more about RiskDex at Learn More About RiskDex;
• VolDex on the Nasdaq-100 rose by 10.94% to close at 23.65;
• Every volatility metric for the Nasdaq-100 rose on the week with the exception of both CallDex (30-Day and 7-Day) measures;
• The yield on Treasury Notes fell by 15 basis points to close at 4.056% as Treasury notes rallied in price by 0.98% as some investors continued to flee stocks for Treasuries. Treasury Bond VolDex finally showed some life and gained 7.56% to close at 11.27;
• Bitcoin futures lost 1.59% after losing 16.69% during the previous week. This week’s loss came despite a 5.19% rally on Friday. Bitcoin volatility eased after exploding last week;
• The individual equities we cover were mostly lower for the week with only MSFT (+0.04%), TSLA (+1.54%), and WMT (+2.07%) gaining ground on the week. VolDex for individual names was higher across the board with only GOOG showing a decline (-2.32%).
• The Nations Indexes Optimism Index® fell by 18.25% to close at 58.08. Our Optimism Index is always available in real-time on our home page at NationsIndexes.com;
• You can always learn more about all our indexes at Learn More About Our Indexes;

Equity Index Volatility:

The S&P 500 lost 1.39% this week due to Thursday’s decline of 1.57%. It is now lower for 2026.

Our volatility metrics for the S&P 500 have been signaling weakness in the S&P 500 and we continue to see that. Last week we referenced that week’s volatility metrics and noted, “None of this price action is positive for stocks.” That continues to be the case.

S&P 500 RiskDex gained another 29.08% this week to close at 6.84. That is the 98th percentile of its 52-week range.

Last week we pointed out that, “The gain in VolDex and PutDex but decline in TailDex likely indicates that traders were moving hedges from deep out-of-the-money (i.e., TailDex) to at-the-money (VolDex) and just out-of-the-money (PutDex). This signals increased pessimism on the part of traders and investors.”

That certainly proved to be the case although traders were buying all strike prices except out-of-the-money calls in an effort to be long volatility this week. We show this in our Option Window graphic below.

Historical metrics (Average, median, 10th percentile, 25th percentile, 75th percentile, and 90th percentile) for all out indexes are available to subscribers at NationsIndexes.com.

Historical metrics (Average, median, 10th percentile, 25th percentile, 75th percentile, and 90th percentile) for all out indexes are available to subscribers at NationsIndexes.com.

Why It Matters…Historical data for all our indexes is available to subscribers at the Everything! level and they allow option traders to understand the context of the current option pricing environment – the current environment, while not unique, is unusual. Volatility is mean-reverting and that is a phenomenon traders can take advantage of in both directions. But you have to understand what normal is, what the “mean” is, in order to do so.

The Nasdaq-100 lost 1.37% this week and is now down 2.05% for the year. Nasdaq-100 VolDex gained 10.94%.

Nasdaq-100 RiskDex rose by 22.16% to close at 5.10 which is the 93rd percentile of its 52-week range.

Nasdaq-100 VolDex is still at just the 28th percentile of its 52-week range.

While RiskDex in both the S&P 500 and Nasdaq-100 are very high, signaling that traders believe there is much more likelihood of a decline than a rally over the next 30 days, absolute measures like VolDex and PutDex in both the S&P 500 and Nasdaq-100 are expensive but not egregiously so. Their level relative to their 52-week ranges is skewed by very high volatility levels reached in April 2025 but S&P 500 VolDex is still below the peaks reached in March, October, and November of last year.

You can learn more about VolDex at Learn More About VolDex;

Why It Matters…Traders have to have the objective data provided by our indexes to trade in a way that doesn’t rely on hunches or guesses.

Nations Investor Optimism Index®:

The Investor Optimism Index® fell by 18.25% to close at 58.08. It is worth noting that it remains above the 50 level which separates “optimistic” from “pessimistic”.

The index takes into account the current levels of S&P 500 VolDex, TailDex, and RiskDex and compares them to their rolling 2-year ranges. It is plotted on a 0 to 100 scale.

Our Optimism Index is now available in real-time on our home page at Nations Optimism Index.

Option Window:

Option Window fills in the blanks between TailDex, PutDex, VolDex, and CallDex and reveals how trade flows were driving option prices. This week you can see buying of a broad range of strike prices from 0.5 standard deviations above at-the-money (approximately 6980 in the S&P 500) down to deeply out-of-the-money puts.

Traders were buying just out-of-the-money calls to own volatility rather than because they expect a rally during the next 30 days.

Term Structure:

The Nations TermDex® measure of VolDex term structure illustrates S&P 500 VolDex for various tenors. It provides insight into both near-term and longer-term expectations for volatility in the S&P 500.

Friday’s closing term structure, in red, was elevated above, and flatter than, last week’s closing term structure. And it was little changed from Thursday’s closing term structure (in black) except in the 7-Day tenor which fell due to the looming holiday, the passing of the CPI catalyst (in line with expectations), and Friday’s close which was little changed from the day before (+0.05%).

1DTE Options:

S&P 500 1-Day VolDex rose by 25.20% to close at 12.27.

Very short-dated volatility measures which use a variance swap methodology, as 1-day VIX does, inject significant error into the resulting measure because of the way out-of-the-money options trade in the hours before expiration. The VolDex at-the-money methodology is particularly suited for these very short-dated tenors.

Other Asset Volatility:

Treasury Bonds and Notes:

Treasury Bond volatility metrics were mixed this week but the price action is informative. VolDex and CallDex rallied, signaling that traders expect more volatility in Treasury Bond prices but with an upward bias. PutDex, RiskDex, and TailDex all fell, signaling that traders believe there is much less likelihood for a decline in Treasury Bond prices. Much of this belief is due to concerns about equity prices and the thinking that weakness in equity prices will support bond prices.

Treasury Bond VolDex closed at the 14th percentile of its 52-week range so while it has rallied, it is doing so from a very low base.

Bitcoin:

Bitcoin fell 1.59% after falling by 16.69% in the previous week. This week’s performance would have been even worse but for a 5.19% rally on Friday.

Bitcoin volatility eased as would be expected after exploding last week.

Traders had been willing to short bitcoin volatility when VolDex was near 50. That is likely no longer the case until bitcoin swings taper but we will be watching for their return.

Bitcoin TailDex fell by 37.35% for the week but this should not be considered a vote of confidence for bitcoin. It is instead a response to Bitcoin TailDex gaining 155.56% last week.

You can learn more about TailDex at Learn More About TailDex.

Precious Metals:

Silver fell by 0.03% this week but each day had a move of at least 2.46% (Friday) with a gain of 8.14% on Monday and a loss of 10.95% on Thursday.

As we like to point out, realized volatility tends to display periods of lower realized daily volatility and periods of higher realized daily volatility like the one we are experiencing now.

Volatility was mixed in silver as you can see.

A Silver VolDex reading of 65.09 (Friday’s close) signals that traders expect daily moves in silver of 4.07% (Divide VolDex by 16 to turn the annual value to a daily value). Silver moved by more than that 3 days this week.

Equities:

We have expanded the list of single names we cover to include not only the most dynamic stocks in the S&P 500 and the stocks with the highest option volume, but also the largest names in the S&P 500.

Technology and AI-related names had another tough week but, unlike last week, “old economy” names did not fare much better. AAPL lost 8.03% for the week with a decline of 5.00% on Thursday due to concerns that the delay in a Siri upgrade, and other delays, means AAPL is falling behind in AI innovation.

JPM fell by 6.16% amid worries about declining fee-based revenues and falling trading activity.

VolDex rose for every individual name we cover with the exception of GOOGL (-2.32%). It rose by 19.52% for AAPL and by 22.88% for JPM for the reasons mentioned above.

PutDex rose for every name we cover, including GOOGL, and rose by more than 20% for AAPL and JPM.

Last week we pointed out that RiskDex for every individual equity we cover was above 1.00 meaning PutDex was higher than CallDex. That remains the case although it fell slightly for BRKB, LLY, and AVGO.

It rose by 10.50% for TSLA which is the name which has frequently posted a RiskDex reading below 1.00 signaling call skew.

You can learn more about RiskDex here.

All our index values are available in real-time to subscribers.

Scott's Weekly Commentary: