Mortgage Giant Rocket Sees Surge in Bullish Options Amid Post-Midterm Housing Rally

Key points

• The S&P 500 rose nearly 2% on Wednesday, recovering recent losses as the Cboe Volatility Index fell by four points to below 17, marking its largest one-day drop since July.
• Rocket Companies, a major mortgage lender and Redfin owner, experienced options volume double the 30-day average, with 90% of the 110,000 contracts traded being calls, indicating strong bullish sentiment.
• Crude oil prices fell below $90, causing energy stocks to drop 5.6%, the largest sector decline in the S&P 500, while solar energy stocks rallied 9% to their highest levels since July.
• Consumer discretionary stocks rose nearly 5%, but options volume in the sector remained below average and split between puts and calls, suggesting less conviction compared to housing trades.
• Semiconductor options flows turned bearish, with the VanEck Semiconductor ETF falling 2.6% to its lowest since May, as 70% of the doubled options volume consisted of puts.

Background

This market rotation follows the November 2026 midterm elections, where a Democratic blue wave sparked expectations of legislative action on housing affordability. Earlier this month, homebuilder stocks like Lennar and D.R. Horton surged on similar hopes, while the 10-year Treasury yield dipped, signaling potential relief for mortgage rates. Rocket Companies had previously fallen nearly 50% this year before turning around in October, making the current options surge a notable reversal in sentiment.

Why it matters

The sharp drop in volatility and the heavy bullish options activity in housing suggest investors are betting on policy-driven relief for mortgage rates and home prices. Conversely, the bearish options flow in semiconductors and energy indicates a rotation out of high-beta tech and commodity-heavy sectors, reflecting a shift toward defensive or policy-sensitive assets following the election results.

What to watch

Traders will watch if the bullish momentum in housing stocks sustains through the November 20 expiration of the most popular call options. Additionally, the continued decline in crude oil prices and the rally in solar energy will determine whether the rotation away from energy and big tech persists or reverses in the coming weeks.