The unexpected never happens when you're looking for it, which may explain why tech stocks have remained so strong in the face of surging rates and questions about the AI complex. In the options pits, traders are the most prepared for a pullback since early Summer.

The Nasdaq-100 Index declined as much as 1.8% Thursday following a report from the Financial Times that ChatGPT owner OpenAI's revenues are coming up short. As the index slid, the number of open put contracts tied to the Invesco QQQ Trust relative to calls reached 1.49, the highest since the last week of June, according to Barchart data.

The metric isn't just the result of a one-day anomaly: the ratio has been moving in favor of puts since August, despite a steady climb in big-tech stock prices that culminated in a string of all-time highs up through Tuesday. On Wednesday, the two biggest options trades of the session, one in the State Street SPDR S&P 500 ETF Trust (SPY) and another in Meta Platforms (META), were bearish. In short, options traders have been loading up on protection on fears of a pullback, whether driven by rising rates of cracks in the AI narrative.

Interpreting the message from the options market at this juncture is tricky. On the one hand, the buildup in hedges seen in the put/call ratio of QQQ suggests selloffs would be met with support as hedges turn to profit. One catch: the same ratio in the State Street SPDR S&P 500 ETF Trust (SPY) and S&P 500 Index (SPX), is near average.

And while the number of puts on QQQ increased Thursday, the biggest trades were actually bullish.

At 11 a.m. ET, in the biggest trade of the session, there was a $15 million sale of almost 5,000 740-strike puts expiring in March. Those puts are less than $8 out-of-the-money, meaning the index needs to hold or rally for them to pay off. Then at 2 p.m., someone bought 6,500 of the 835-strike calls in the same March expiry - the biggest option purchase in the ETF, worth over $8 million, that needs a 14% rally to pay off. 
That was during regular trading hours. In extended hours, the sentiment flipped. 

Just after 4 p.m., someone bought 15,000 680-strike puts for $16 million expiring Jan. 15, and at the same time sold the same number of 760-strike calls expiring Oct. 16, collecting $4 million. For a total premium of $20 million, it's a starkly bearish bet that ranked as the highest-premium trade of the day.
It's a puzzling setup even for the pros. 

"Neither bonds nor that report on OpenAI revenues caused much damage," said Don Kaufman, a 15-year ThinkOrSwim Trader Group director and co-founder of TheoTrade. "The market can drop, but a more sustained selloff would likely require enough selling pressure to turn a market that absorbs downside into one that accelerates it."