On the U.S. stock market on the 24th, major tech stocks showed notable weakness on the upside, with semiconductor and memory stocks facing even stronger selling pressure.
Ahead of this week’s Federal Open Market Committee (FOMC) meeting and earnings reports from four major tech companies, market participants have adopted a cautious stance.
With monetary policy and earnings from four large-cap companies concentrated over two days, the key focus will be whether market caution toward indices remains limited to temporary hedging or leads to intensified stock selection within the tech sector.
For U.S. equities this week, the major turning points will be the FOMC policy rate decision and Chair Waller’s press conference on the 29th, followed by Microsoft and Meta’s earnings after the close that same day, and Apple and Amazon’s results after the close on the 30th.
While the base case for the FOMC is expected to be holding rates steady, attention will center on whether officials signal potential additional rate hikes or a prolonged period of high rates due to concerns over rising oil prices and renewed inflationary pressures. Hawkish commentary could push long-term yields higher, exerting further downward pressure on high-valuation tech and semiconductor stocks. Conversely, if the Fed’s stance proves less stringent than market expectations, it could trigger unwinding of recently accumulated hedges.
In the options market, differing positioning is evident between the index and individual stocks ahead of this week’s key events. $Invesco QQQ Trust (QQQ.US)$ For the index, near-term put open interest is substantial, reflecting a dominant stance preparing for a broader market decline. Meanwhile, $NVIDIA (NVDA.US)$ call activity is outweighing puts, indicating sustained optimism toward AI semiconductor demand. Below, we examine the divergence in sentiment through implied volatility levels, put/call ratios, and large block trades.
As an index-tracking ETF, $Invesco QQQ Trust (QQQ.US)$ its implied volatility (IV) stood at 28.63%. While not high in absolute terms, its IV Rank is at 69 and its IV Percentile has reached 90%, indicating a relatively elevated level of caution compared to the past year.
The total put/call ratio across all expirations, based on daily volume, was approximately 1.18, showing slightly more put activity than calls.
Moreover, looking at open interest for the July 29 expiration, the put/call ratio reached about 2.1, with put open interest significantly exceeding call open interest—suggesting that protective positioning against downside risk is building ahead of the FOMC meeting and major tech earnings.
The term structure shows a backwardation pattern, where near-term IV is higher than longer-dated IV, reflecting market participants paying a premium to hedge against price volatility tied to imminent events.
Among large trades, put buying for downside protection stood out. While puts held only a modest edge over calls on a total-volume basis across all expirations, open interest for the July 29 expiry—which includes key events—shows notably heavier put positioning. Rather than signaling broad bearish sentiment across the options market, this reflects a strategic move to secure portfolio insurance via index options ahead of critical events.
While the index is shoring up its defenses, $NVIDIA (NVDA.US)$ at NVIDIA—a leading AI semiconductor stock—call-dominant positioning continues.
The put/call ratio based on total volume across all expirations stood at approximately 0.57, indicating call trading significantly outpaced puts.
Even for the July 31 expiration, calls lead in both volume and open interest. The open interest-based put/call ratio was around 0.7, showing that upside-oriented trades dominate the near-term options market.
Implied volatility (IV) stood at 45.61%, exceeding that of QQQ. However, IV Rank was at 43 and IV Percentile at 56%, placing it in the mid-range relative to its one-year distribution—suggesting the market hasn’t priced in event risk as intensely as it has for QQQ.
Among large trades, near-term call buying was observed alongside purchases of calls with longer-dated expirations. At the same time, long-dated put buying also occurred, indicating that hedging against downside risk hasn’t fully disappeared.
Nevertheless, while put open interest continues to build in the index, NVIDIA maintains its call-dominant stance. Market participants appear to be differentiating between mega-cap tech names reporting earnings this week and those still benefiting from sustained optimism around AI semiconductor demand.
Notably, NVIDIA’s earnings announcement isn’t scheduled for this week but lies ahead. This week, its price action will likely be more influenced by broader market moves driven by the FOMC decision and earnings from other major tech firms than by company-specific catalysts.
This week will be pivotal in determining whether defensive positioning in the index remains limited to temporary event-related hedges or if stock selection within the tech sector intensifies further.
As of the 24th, QQQ’s IV Rank and IV Percentile were elevated, and for the July 29 expiration, put open interest significantly exceeded call open interest. A backwardation structure—where nearer-term options exhibit higher IV—was also evident, reflecting a cautious market stance ahead of the FOMC meeting and major tech earnings.
Meanwhile, at NVIDIA, calls dominated in both all expirations and the July 31 expiry. Implied volatility (IV) rank and IV percentile remained around the mid-point of their one-year range, indicating less caution priced in compared to the index.
Notably, this week features not only the FOMC meeting on the 29th but also a concentration of earnings reports from major U.S. tech firms, including Microsoft, Meta, Apple, and Amazon.
Will the FOMC’s policy decision and press conference, along with AI investment plans, capital expenditure outlooks, and profitability forecasts from these four companies, prompt unwinding of hedges built up in QQQ—or will they intensify stock-specific selectivity?
Changes in QQQ’s implied volatility and put open interest after these events, as well as whether NVIDIA continues to show call dominance, will likely provide key clues for the next move in the tech sector.
-moomoo News Kingsley
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