America’s bull market has entered its manic phase
Options markets show optimism is giving way to euphoria
It is not enough for investors merely to book tomorrow’s profits today. Share prices really come unstuck from reality only after a mania takes hold.
Then comes the grim doggedness of revellers who know the next morning’s hangover will be dreadful and are determined to put it off for as long as possible. Then, when it no longer is, comes the crash.
Options are often described as insurance contracts: a simple “put” option, for instance, confers the right but not the obligation to sell a stock for a set “strike” price on an expiry date. This allows an investor to own the stock while limiting losses should prices crash—in return for paying to buy the option in the first place.
Today, however, much of the options market is better understood as a casino in which punters gamble on stock prices.
Volumes recorded in 2025 were nearly double those in 2020, itself a blow-out year. And trading in ultra-short contracts, which are great for gambling but almost useless as insurance, has expanded even faster. Transactions for options on the S&P 500 index that expired on the same day were 3.7 times higher in 2025 than in 2021.
Betting that prices will go to the Moon, or Mars. The party is entering the phase where things get out of hand. It might stay there for a while. But the longer the hangover is put off, the more it will hurt.
Buttonwood The Economist 16 June 2026
Allison Schrager: Does the US Now Have a Casino Economy? Yes and No
https://englundmacro.blogspot.com/2025/11/allison-schrager-does-us-now-have.html
Warren Buffett, 91 years old, Says Markets Have Become a ‘Gambling Parlor’
https://englundmacro.blogspot.com/2022/05/warren-buffett-91-years-old-says.html
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