The more deliberately you wait for something, the less likely it is to happen. This may explain why tech stocks have remained strong even as interest rates surge and the AI sector faces heavy skepticism.

But in the options trading market, traders' level of hedging preparation has reached its highest since early this summer. Reports that ChatGPT parent company OpenAI's revenue fell short of expectations sent the Nasdaq 100 Index (NDX) down as much as 1.8% on Thursday. Data from Barchart shows that during the index decline, the ratio of outstanding put options to call options on QQQ (Nasdaq 100 ETF) rose to 1.49, the highest since the last week of June.

This metric is not a one-day anomaly. Despite large-cap tech stocks continuing to climb and hitting consecutive record highs through Tuesday, this ratio has been steadily tilting toward puts since August. In short, out of concern over pullback risk 鈥?whether from rising rates or a breakdown in the AI narrative 鈥?options traders have been aggressively buying hedging protection positions.

Interpreting the options market signals at this juncture is not straightforward. On one hand, the rising QQQ put/call open interest ratio means that if a selloff occurs, a large number of hedged positions would move into profit, providing support to the market. But notably, the same ratio for the S&P 500 ETF (SPY) and the S&P 500 Index (SPX) is near its historical average.

Although QQQ put open interest increased on Thursday, the largest intraday trades were actually bullish in direction. Invesco QQQ Trust (Nasdaq 100 ETF) real-time quote | Nasdaq | USD 750.62, +3.04 (+0.41%) | 10:57 AM ET. At 11 AM ET, the day's largest single trade appeared: an investor sold nearly 5,000 put options with a strike price of 740 expiring in March, worth $15 million. These options were only slightly out of the money, meaning the underlying index needs to hold at current levels or rise for the trade to profit. Then at 2 PM, a trader bought 6,500 call options expiring in March with a strike price of 835, worth over $8 million 鈥?the largest call option purchase of the day for the ETF; this trade requires the underlying to rise 14% to be profitable.

All of the above occurred during regular U.S. trading hours. But in after-hours trading, market sentiment reversed completely. Just after 4 PM ET, a trader spent $16 million to buy 15,000 put options expiring January 15 with a strike price of 680, while simultaneously selling an equal number of call options expiring October 16 with a strike price of 760, collecting $4 million in premium. This combination trade involved a total premium outlay of $20 million, the largest premium trade of the day, representing a clear deep bearish bet.

Even for professional traders, the logic of this combination is puzzling. Don Kaufman, who has 15 years of industry experience, serves as director of the ThinkOrSwim trading group, and is co-founder of TheoTrade, said: "Bond market volatility and the reports about OpenAI's revenue have not dealt any substantial damage to the market. The market can certainly fall, but for a sustained selloff to form, there needs to be enough selling pressure to transform the current market 鈥?which can absorb downside shocks 鈥?into one that accelerates downward."