NASDAQ 100 put-to-call skew drops to historic low as investors turn bullish

The Nasdaq 100 options market is flashing a signal that would have seemed absurd 18 months ago: investors are more interested in betting on further gains than protecting against losses. The put-to-call volatility skew, a measure of how much more expensive downside protection is relative to upside bets, has collapsed to historic lows, and in some cases has fully inverted.

The numbers behind the confidence

The NDX put/call implied volatility spread fell to roughly 4% by late May 2026. For context, that same spread spiked to approximately 15.5% during stress periods in early 2025, when tariff fears and recession chatter had traders scrambling for protection. That’s a nearly four-fold compression in barely over a year.

By August 2026, the 1-month put-to-call skew had dropped to 1.15 points, the lowest reading since April 2025.

Then things got genuinely unusual. On September 15, QQQ’s 25-delta call implied volatility stood at 22.8%, while put IV sat at just 16.7%. That’s an inverted skew of negative 6.1 percentage points. In plain terms, traders were paying a premium for calls (upside bets) over puts (downside hedges), which is the opposite of how options markets typically behave.

Goldman Sachs’ volatility desk flagged the dynamic back in early June 2026, labeling the options skew as “broken” at 18-month lows. The desk noted that downside protection had become remarkably cheap against the backdrop of an AI-driven market rally that showed few signs of slowing.

Historical parallels and the risk of complacency

Low skew environments are not unprecedented. They tend to show up during sustained bull markets when conviction is high and realized volatility is low. The late stages of the 2020-2021 rally saw similar dynamics, with put demand drying up as tech stocks marched higher month after month.

The uncomfortable part of that analogy is how those periods eventually ended. The 2022 drawdown caught many investors underhedged, and the Nasdaq 100 fell roughly 33% from peak to trough that year. Low skew didn’t cause the decline, but it meant fewer portfolios had cushioning when it arrived.

What analysts find concerning is the degree of the current inversion. A negative 6.1 percentage point spread between call and put IV isn’t just low hedging demand. It’s active speculation on the upside, which represents a qualitative difference in risk appetite.

Downside protection is historically cheap right now, which means the cost of being wrong about the bull case is relatively low for anyone willing to buy puts. Meanwhile, the crowded nature of upside positioning means that any catalyst could trigger a sharper-than-expected reversal as dealers unwind hedges and call holders rush for the exit simultaneously.