Software stocks are experiencing a significant rebound, with the iShares Expanded Tech-Software Sector ETF (IGV) now in positive territory for the year. Cybersecurity stocks, in particular, are leading the charge, with strong performances from companies like CrowdStrike and Palo Alto Networks.
This surge is drawing increased attention from options traders, and upcoming earnings reports from major players like CrowdStrike and Oracle will be closely watched for continued momentum.
Is the "SaaSpocalypse" averted? Software stocks are experiencing a remarkable resurgence, recovering from an artificial intelligence-driven sell-off that saw the sector shed nearly 40% from its peak last year. On Monday, the group rallied approximately 6%, pushing the year-to-date performance of the iShares Expanded Tech-Software Sector ETF (IGV) into positive territory for the first time. The ETF is now less than 9% away from its all-time high, achieved in September, following a robust 44% surge from its April low.
Leading this charge are cybersecurity stocks. The Amplify Cybersecurity ETF (HACK) is now up over 30% year-to-date, buoyed by significant gains in companies like CrowdStrike, which has soared 67% in 2026, and Palo Alto Networks, up 63%.
"AI equals more cybersecurity demand as there is more to secure," stated Christian Magoon, CEO of Amplify ETFs. "We think this also plays into M&A potential for the industry."
The impressive rally is rewarding options traders who had been anticipating this comeback for weeks. As early as mid-May, a shift occurred from the VanEck Semiconductor ETF (SMH) to IGV, with call volumes beginning to outpace put volumes. This trend intensified on Monday, with call volumes in IGV more than doubling put volumes, while in SMH, put volume was three times that of calls. Approximately twice as many calls were bought than sold in IGV.
"This software rally is white-hot like the Knicks in the NBA playoffs, proving the doubters wrong by the day," commented Dan Ives, managing director and senior equity research analyst at Wedbush Securities.
However, bulls face new challenges. Several major software earnings reports are on the horizon, including those for Palo Alto Networks on Tuesday and CrowdStrike on Wednesday. Oracle, the largest holding in the IGV ETF, also has earnings later this month.
Significant investor interest in Oracle is evident. On Monday, options premium reached $1.3 billion for the stock, with $1 billion attributed to call contracts. Call volume more than tripled put volume, and more calls were bought than sold, with over 114,000 calls likely purchased compared to just over 25,000 puts.
Looking more immediately, traders anticipate a substantial move around CrowdStrike's earnings on Wednesday. Options prices suggest an approximate 9% move for the stock leading up to the report. However, data from Cboe's LiveVol indicates that the options market has historically over-priced the actual move in CrowdStrike over the past seven quarters.
