Options Brief - AI rally, summit day two - 15 May 2026

Thursday’s session closed at all-time highs on AI earnings and summit optimism; Friday brings caution as Trump and Xi enter the second and final day of their Beijing talks.

Cisco surged 13% after a strong earnings beat and job cut announcement, Nvidia extended its run, and summit-day-one optimism around the Trump-Xi meeting in Beijing pushed the S&P 500 to a new all-time closing record above 7,500. Heading into Friday, the mood has shifted. The KOSPI fell nearly 4% in the live Friday session, US futures are pointing modestly lower, and Xi’s Wednesday warning that mishandling Taiwan could lead to “conflicts” is hanging over the second and final day of talks. The options market is split: equity sentiment is historically call-heavy, while the VIX term structure is quietly steepening toward June.

Market snapshot

All equity and index values are Thursday 14 May closes. Futures and Asian market values represent live prices at approximately 6:10am Brussels/Copenhagen time on Friday 15 May. European markets had not yet opened at time of writing.

• S&P 500: 7,501.24, +0.77% (new all-time closing record)
• Nasdaq 100: 29,580.30, +0.73%
• Dow Jones Industrial Average: 50,068.02, +0.74% (back above 50,000)
• DAX / Euro Stoxx 50: 24,456.26 (+1.32%) / 5,934.97 (+1.26%) (Thursday closes)
• US 10-year yield: 4.52%, up 8.3 basis points on the Thursday session
• S&P 500 futures / Nasdaq 100 futures: –0.33% / –0.52% (live at 6:10am CEST)
• KOSPI: –3.94% (live Friday session)
• Market regime: Low vol bull – VIX 17.3 (Thursday close), 20-day realised vol 10.0% (decreasing), S&P 500 +8.56% above its 50-day moving average

Options angle

The CBOE Volatility Index closed Thursday at 17.26, down 3.41% on the session, confirming the low-vol bull regime. Front-month VIX futures moved in the opposite direction, gaining 1.03% to 20.75, pushing the spot-to-futures gap to roughly 3.5 points. The VIX 3-month-to-spot ratio stands at 1.21, meaning the futures curve is notably steep: near-term calm is fully priced in, but June carries a meaningful uncertainty premium that spot VIX alone does not capture.

The CBOE SKEW index, which measures the premium investors pay for out-of-the-money downside protection relative to equivalent upside exposure, remains elevated at 139.32 despite a 1.55% pullback on the session. Elevated SKEW keeps put options structurally more expensive than equivalent calls. The CBOE S&P 500 equity put/call ratio (PCCE), which tracks protective put activity relative to bullish call activity on individual stocks, fell to 0.536 on Thursday – an unusually low reading consistent with a market leaning heavily on calls for upside exposure. When equity options positioning tilts this far toward calls, market makers typically carry elevated short-gamma exposure, meaning they are forced to buy on rallies and sell on declines, amplifying directional moves in both directions. A negative or ambiguous summit conclusion, a Taiwan headline, or a further rise in US yields could trigger rapid de-hedging and a sharper-than-expected move.

Important note: The strategies and examples provided in this article are purely for educational purposes. They are intended to assist in shaping your thought process and should not be replicated or implemented without careful consideration. Every investor or trader must conduct their own due diligence and take into account their unique financial situation, risk tolerance, and investment objectives before making any decisions. Remember, investing in the stock market carries risk, and it’s crucial to make informed decisions.

Strategy insight – Call spreads over outright calls. With SKEW at 139 and VIX spot at 17.26, call options are structurally cheaper than puts right now. Buying a call spread on the S&P 500 – purchasing a call at a lower strike while selling one at a higher strike – captures bullish directional exposure at a meaningfully lower net premium than an outright call. The elevated put skew makes the short call leg relatively inexpensive, improving the spread’s risk/reward further. This structure suits a scenario where Thursday’s record high holds and the summit wraps constructively. The maximum loss is the net premium paid, defined and capped from the moment the spread is entered.

Strategy insight – Protective puts before the weekend close. With 20-day realised vol at 10% and VIX spot at 17, index put premiums are affordable relative to the past two years. Buying a put spread on the S&P 500 or the iShares Russell 2000 ETF (IWM) before Friday’s close provides defined downside cover into a weekend where the summit outcome is unresolved and geopolitical risk has been explicitly raised. The dealer short-gamma dynamic adds a secondary case: if sentiment shifts abruptly, forced de-hedging can push moves well beyond what the fundamental news alone justifies. The maximum loss on the put spread is limited to the net premium paid; the sold put at a lower strike creates a floor below which the hedge no longer covers further declines.

Conclusion

Thursday’s session was technically clean and the all-time high above 7,500 is a meaningful level. Friday introduces two genuine unknowns: the final Beijing summit outcome and the market’s reaction to it, with the KOSPI already pricing in some disappointment at –3.94% as the European session approaches. The options market is sending a split signal – equity sentiment still call-heavy, VIX term structure steepening toward June – and defined-risk structures on both sides are priced attractively enough to act on before the weekend.