Dispersion index jumps 25% as options traders price big tech moves

The Cboe S&P 500 Dispersion Index has jumped nearly 25% over six weeks to its highest since early August, even as the VIX sits near 17.30. Options traders are pricing bigger moves in megacap tech — Alphabet, Microsoft, Amazon, Apple — than in the index. Saxo's Koen Hoorelbeke says the week is priced as separate company events. Mott Capital's Michael Kramer expects the dispersion-VIX gap to reverse after the Fed decision and big tech earnings. He warns that if single-stock volatility deflates while correlation rises, dealers may sell index futures, counteracting the post-earnings tailwind. The Fed held rates at 3.75%-4%. Midterm results add complexity; Morgan Stanley's Mike Wilson sees a positive catalyst once uncertainty clears.