Full-scale FOMO! Goldman Sachs Flow Expert: Options Trading Volume Hits Record High, US Stocks Experiencing "Frenzied Buying"

The large-scale deleveraging and tech stock sell-off in July had just ended when market sentiment swiftly reversed at the beginning of August.

According to the latest Goldman Sachs report, investors are rapidly rebuilding risk exposure, with demand for call options surging to historical highs. The market has now entered a "the more it rises, the more they buy" positive feedback loop driven by position rebuilding. Goldman Sachs liquidity strategist Lee Coppersmith stated bluntly, "Position reset was completed in July, and now, investors are spending all of August chasing the rally."

Data shows that the S&P 500 Index (SPX) call option volume exceeded 4 million contracts on Tuesday, setting a new single-day record; meanwhile, the SPX put/call option skew saw its largest two-day drop in nearly a decade, reflecting a dramatic surge in investor demand for upside risk exposure.

Even more noteworthy, on the same day, the S&P 500 Index rose by 179 basis points, while the options market had previously priced in only about ±40 basis points of volatility, meaning the actual increase exceeded the implied volatility range by more than four times. According to Goldman Sachs, the last time a similar event occurred was back in December 2016.

Fundamentals and Macro Environment in Resonance: The Logic Behind Chasing Positions Remains Strong

Coppersmith believes that the current wave of position rebuilding is not merely sentiment-driven but the result of improving earnings, economic, and liquidity conditions.

On the corporate side, this earnings season once again validated sustained earnings growth that exceeded expectations. Large cloud computing providers continue to raise capital expenditures, and many companies are starting to show that investment in AI is gradually being transformed into revenue growth, enhanced commercial capability, and increased capital return rates. The AI investment logic is shifting from "input" to "realization."

On the macro side, U.S. economic data has also provided support. The Atlanta Fed's GDPNow model recently raised its forecast for U.S. Q3 GDP growth to nearly 6%. Meanwhile, the Federal Reserve just announced a rate hold a few days ago. Coppersmith believes this creates a highly supportive combination: the economy is re-accelerating, corporate earnings continue to improve, and the risk of further monetary tightening has temporarily receded.

At the same time, both oil price volatility and interest rate volatility have declined, further weakening investors' reasons to maintain light positions and accelerating the return of capital that had previously reduced exposure on a large scale.

Positions Still Light: The "Chase on Gains" Effect is Building Up

Despite the continued market rebound, Goldman Sachs believes the current positioning structure still favors continued gains for risk assets.

Coppersmith points out that, after undergoing one of the largest tech stock de-riskings in a decade, it is clearly too early to judge that investors have fully returned to the market after just two trading days.

On the contrary, price increases themselves raise the psychological threshold for re-entering positions, making it increasingly difficult for sidelined funds to wait for a pullback. This is forming a classic dynamic of "the more it rises, the more urgent the chase"—each rally further intensifies investor pressure to chase positions.

This sign has already appeared at the trading desk level.

Goldman's trading desk reports that, in the first two trading days of August, client demand for index Beta exposure was exceptionally strong and almost entirely concentrated on the bullish side. At the same time, the market saw a rare "Spot Up, Vol Up" combination for two consecutive days, meaning investors were not taking profits during the rally but were instead continually buying new upside protection and leveraged exposure—an occurrence rarely seen in market history.

Goldman Sachs Remains Bullish on South Korea: AI Hardware Recovery as the Most Cost-Effective Allocation

Beyond U.S. equities, Goldman Sachs also identifies the Korean market as one of the most attractive catch-up opportunities at the moment.

Coppersmith notes that the KOSPI (Korea Composite Stock Price Index) currently trades at a forward P/E ratio of just 4.7, its lowest since 2001 and even lower than during the global financial crisis, whereas the market's return on equity (ROE) is still near 25%, highlighting a sharp contrast between valuation and profitability.

Fundamentally, the memory industry is still recovering. Goldman Sachs expects DRAM prices to maintain double-digit quarter-on-quarter growth, strong demand for high-bandwidth memory (HBM) to persist, and long-term supply agreements to continually lock in new capacity.

Following a historical correction and record sell-off, Goldman Sachs believes that the Korean market may currently be the most direct and cost-effective choice for positioning for the AI hardware cycle recovery at low valuations.