After the Democratic wave in the midterms, stocks surged as options traders sold volatility and rotated away from big-tech trades; the S&P 500 rose just under 2% by midday Wednesday, recovering losses from Friday and Monday. The Cboe Volatility index fell about four points to below 17, its biggest one-day drop since at least July, while WTI crude traded below $90 and energy stocks fell 5.6%, the largest decline in the S&P 500. Options on the Energy Select Sector SPDR ETF (XLE) ran at more than three times their 30-day average, with 57% puts, and the top trade was the 62.5-strike put expiring Jan. 15, per SpotGamma data, suggesting a possible gradual reversal in the sector that has been 2026's best performer. Mortgage lender Rocket Companies, which fell almost 50% this year before recovering last month, saw options volume at double its average, with 90% of 110,000 contracts being calls. On the other side, the solar ETF TAN rose another 9% to its highest since July on volume more than five times average, while the semiconductor ETF SMH fell 2.6% to its lowest since May, with 70% of its options volume in puts.
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