Five thousand three hundred people bought healthcare calls on Thursday. That's the entire story. They pressed the buy button on XLV options because someone somewhere decided the Dow hitting a record means healthcare stocks should go up. The Dow contains exactly zero healthcare companies that matter to this ETF but why let that ruin a perfectly good afternoon of gambling.
The State Street Health Care Select Sector SPDR ETF. Try saying that five times fast. Try saying it once without hating everyone involved in its creation. Some committee at State Street spent six months in conference rooms arguing about whether to put "Select Sector" before or after "Health Care" and this is what they birthed. XLV. Three letters that represent the hopes and dreams of 5,300 call buyers who think Johnson & Johnson is about to cure aging because Microsoft had a bad week.
Only 1,000 puts were purchased. This means 5,300 traders looked at the current state of American healthcare—insurance companies denying claims through AI, drug prices that require payment plans, hospitals charging $47 for a single Tylenol—and thought "bullish." These are the same people who believe "no tech, no problem" is investment thesis instead of what a Luddite yells before smashing his iPhone.
Traders think these stocks can lead now. Lead what exactly? Lead us into a future where we're all buying calls on the companies that will bankrupt us when we get sick? The circular economy finally perfected. You pay premiums to UnitedHealth, they deny your claim, you buy calls on UnitedHealth to recoup your losses, you use those gains to pay more premiums. Beautiful system.
The Dow makes a record and suddenly everyone's a rotation expert. Tech is tired so healthcare is fresh. Yesterday it was energy. Tomorrow it'll be industrials. Next week we'll be rotating into companies that make buggy whips because at least buggy whips never crashed the Nasdaq. The only thing rotating here is which sector gets to disappoint you next.
Those 5,300 call buyers just volunteered to hold the bag while tech bros take a nap.
Photo by Maxim Hopman on Unsplash
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