Software stocks are experiencing a significant bull run, with the iShares Expanded Tech-Software ETF (IGV) rallying 35% from its April low. Traders are heavily invested in bullish options on IGV, with call volumes outpacing puts by a four-to-one ratio.
This optimism extends to individual stocks like ServiceNow and Workday, which saw substantial gains. Options activity indicates a strong belief in continued upward momentum for the software sector.
The software stock sector has transitioned from a mere recovery to a full-blown bull market, with traders increasingly optimistic about its future prospects. The iShares Expanded Tech-Software ETF (IGV) has experienced a remarkable 35% surge from its April low, bolstered by a significant 5% rally on Friday. This upward momentum was fueled by double-digit percentage gains in prominent software companies such as ServiceNow and Workday.
Options traders are demonstrating strong conviction, pouring into bullish positions on the IGV. Trading volume for the ETF has surged to over five times the daily average of the past 30 days, with call options outnumbering put options by a substantial four-to-one ratio. In Friday's trading session alone, over 50,000 calls were bought on IGV, contrasting with fewer than 6,000 puts. This trend extends to individual software giants, with Salesforce, Oracle, and ServiceNow also seeing call option volumes five times greater than put volumes, according to data from ThinkOrSwim.
The financial markets are taking notice, with more capital being traded in IGV options than in the semiconductor ETF SMH as of midday Friday. SpotGamma reports that $120 million of the $140 million total premium for IGV options was in call contracts.
Traders work at the New York Stock Exchange on May 28, 2026. | NYSE
Dan Deming, managing partner at KKM Financial, notes the sustained strength: "We're holding steady on the IGV versus SOX dispersion, we're expecting that mean reversion to continue. It's just been so dramatic. Our trade is more long software than short semis."
While the bullish sentiment is palpable, some traders are employing hedging strategies. Spreads were utilized to offset call-buying in IGV, and significant notional trades included call sales, with several multi-million-dollar sellers of the 90-strike calls expiring in December. The most actively traded contract after the 90-strike calls was the June 18 105-strike call, which saw over 20,000 contracts change hands. These contracts require a price increase of slightly over 5% to break even.
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