U.S. Options Trading Tops 112 Million Contracts as Stocks Fall 4.4%

Key Facts

U.S. options trading topped 112 million contracts on Thursday, November 5, marking a record daily volume, according to an Investing.com report published the following day. Average daily trading volumes rose 53% above October levels in a session that saw a sharp decline in stocks. Put options accounted for slightly more than half of contracts traded, the report said. Put options typically reflect a bearish stance when bought, the report said, while hedging costs have risen sharply since the selloff began on Thursday morning. The activity came as the two main stock indexes fell and a measure of market volatility climbed to its highest level since March.

The S&P 500 fell 4.4% on Thursday, while the Nasdaq 100 dropped more than 6%, according to Investing.com. Reuters reported that the Nasdaq 100 fell 6.4%, wiping $2.5 trillion off market capitalization. The Associated Press described the S&P 500 loss as its worst since the tariff turmoil in April 2025, and said the Nasdaq Composite fell 5.5%. The report also said the Nasdaq was down 11.9% from its record peak set the previous month, a loss that exceeded the 10% threshold at which the report defines a decline as a correction. The pressure spread to Asia, where South Korea's Kospi fell 5.3% and Japan's Nikkei 225 dropped 1.8%.

The selloff was accompanied by a clear rise in measures of anxiety and hedging. Reuters said the VIX jumped 11.75 points to an eight-month high of 28.36, before closing at 28.18. The Investing.com report said the index reached its highest level since March. Reuters also reported that put option premiums across index products were about twice their usual level, signaling a higher cost to buy protection against a decline. In the bond market, the 10-year U.S. Treasury yield fell to 4.84% from 4.90% late Wednesday, after reaching 4.95% on election night; the Associated Press said the move could reflect investors seeking safety.

Options activity was not one-sided, Reuters said, bringing together investors seeking fresh protection in semiconductor and artificial intelligence stocks and others taking profits on existing hedges. The report described the selloff as driven by concerns that a Democratic win in the midterm elections could slow the expansion of AI infrastructure, alongside a retreat in technology stocks. Reuters quoted one market participant as saying: "If a reassessment of AI investments is a long-term shift, rather than just trading repositioning, that raises a problem." The distinction reflects differing motives among options market participants during the session: demand for new protection and the closing of previous hedge positions. The report also predicted that leveraged exchange-traded funds would sell about $47 billion in stocks near the close to rebalance their portfolios.

The expected sales by leveraged funds would be the second-largest amount in Nomura's data going back to July 2006, according to Reuters. The estimate came amid pressure on U.S. stocks, with broad losses across technology indexes and the wider market. On the same day, data from the U.S. Bureau of Labor Statistics showed nonfarm payrolls increased by 165,000 in October, while the unemployment rate held at 4.1%, little changed. Job gains were concentrated in professional and business services, health care, transportation and warehousing, the bureau said. The data were released on November 6, after the trading session that recorded a record daily rise in options volume.

The U.S. jobs report for November is scheduled for release on Friday, December 4, 2026, at 8:30 a.m. Eastern time, according to the Bureau of Labor Statistics. The release is scheduled a month after the October report, which showed job growth and a stable unemployment rate. The options and stock moves seen in the November 5 session came with elevated hedging costs and a volatility index at its highest level since March, according to reports published the following day. Reuters said a continued reassessment of AI investments could be a source of concern if it represents a long-term shift. The rebalancing of leveraged funds near the close remains part of the trading picture the agency described for that session.