Last Friday, the U.S. stock market experienced significant volatility, with options trading volume hitting a historical record. However, Goldman Sachs senior trader Lee Coppersmith stated that the market behavior resembled investors' eagerness to protect their positions rather than a massive exit from the stock market.
On Friday, trade and tariff-related news raised concerns about a repeat of the market turmoil seen in April. However, according to Goldman Sachs trader Lee Coppersmith, while the options market was unusually active, spot stock trading remained relatively calm, with the S&amp;P 500 index's trading volume only 9% above the 20-day moving average, indicating that investors were primarily managing risk through derivative tools rather than engaging in large-scale stock sell-offs.
Data shows that the total options trading volume in the U.S. surpassed 100 million contracts, marking only the second time in history this has occurred— the last time was on April 4, when the market fell by 5.97%. The trading volume of put options reached the second-highest record in history, while call options trading volume hit a new all-time high, exceeding 60 million contracts. <img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/213fd8ce-0b99-4205-aeee-23163bdeaae9.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/213fd8ce-0b99-4205-aeee-23163bdeaae9.jpeg"/>
(Put options trading volume)
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1d2f51e1-5343-4451-9522-ef654a3b7df4.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/1d2f51e1-5343-4451-9522-ef654a3b7df4.png"/>
(Call options trading volume)
Meanwhile, Coppersmith noted that although Goldman Sachs' volatility panic index reached a high of 9/10, the last time it hit this level was in mid-April, the implied volatility of the S&amp;P 500 had not yet reached the levels seen in April or August, and the implied correlation had not exceeded the two-year average.
Goldman Sachs traders believe that there is strong buying interest in the implied volatility and skew of the S&amp;P 500, and the fund flows on Goldman Sachs' trading desk reflect this demand. This phenomenon is primarily at the index level rather than widespread selling at the individual stock level.
<h2>Technical Concerns Over Potential Systemic Sell-Off Triggers</h2>
One of the market's focal points is the technical key points that could trigger a systemic sell-off. Goldman Sachs estimates that the holdings of systematic strategy funds in U.S. stocks are close to $220 billion.
Specifically, the CTA strategy has a long position of about $48 billion in the S&amp;P 500, nearing the upper limit of a multi-year range. The short-term trigger threshold is 6,580 points, which was breached last Friday; the medium-term threshold is around 6,290 points. If these key levels are broken, fund flows could turn negative.
Last Friday, the gamma value of traders (Gamma, γ) experienced the largest decline in over three years, although traders still maintained a net long gamma position in some areas, the extent has weakened. This change reflects the accumulation of structural risks in the market.
<h2>Consumer Finance Sector Under Pressure</h2>
Consumer finance stocks have become another focal point. The trading activity of high-yield consumer finance issuers has risen to its highest level since early April, and related stocks have also shown corresponding volatility
However, Goldman Sachs' research department believes that this weak performance is mainly due to special circumstances rather than a broad repricing of recession risks. The main reasons include:
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The broader service and retail stocks have not weakened in tandem, which aligns with the improvement in activity data and the overall health of consumer balance sheets; even within consumer finance companies, the weak performance is concentrated among a few issuers.
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Goldman Sachs expects this pressure to remain localized and not spread to the entire market.
<h2>Investor sentiment remains resilient, two major themes continue</h2>
Before the volatility last Friday, investor sentiment in the U.S. stock market was actually improving. Last week recorded a net inflow of $14 billion, Goldman Sachs' sentiment indicator recorded +0.3, marking the first positive value since February.
Passive fund inflows and retail margin debt are still one standard deviation above the normal level for the past 52 weeks, although last Friday's price movements may have pulled this indicator back into negative territory.
Goldman Sachs traders believe that the two dominant themes in the U.S. stock market remain largely unchanged: the growth momentum brought by the continuous development of AI, and the drag caused by concerns in the labor market. These narrative threads will continue to take center stage in the third-quarter earnings season starting this week.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f003d7d9-6e08-44a3-981c-a26f5a747e0c.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/f003d7d9-6e08-44a3-981c-a26f5a747e0c.png"/>
Large financial institutions will be the first to release earnings reports on October 14, with about 70% of the S&amp;P 500 market capitalization expected to announce results by the end of the month. The market generally expects S&amp;P 500 earnings per share to grow by 6% year-on-year, down from 11% in the second quarter, but Goldman Sachs' research department anticipates another round of better-than-expected results

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Goldman Sachs trader Lee Coppersmith believes that last Friday, investors primarily managed risks through derivatives tools such as options, rather than large-scale stock sell-offs. Although options trading volume hit a record high, spot stock trading remained relatively calm, with S&P 500 volume only 9% above the average. The market is focused on the trigger points for systemic sell-offs, with CTA strategy long positions nearing their limits. Investor sentiment remains resilient, with two major themes of AI development and labor market concerns continuing to take center stage in the upcoming earnings season

- Last Friday, the U.S. stock market experienced significant volatility, with record options trading volumes, indicating investors were more focused on protecting positions rather than exiting the market.  
- Goldman Sachs trader Lee Coppersmith noted that while the options market was active, spot stock trading remained relatively calm, with the S&P 500's volume only slightly above its 20-day moving average.  
- Concerns about potential systemic sell-offs were highlighted, particularly with key technical levels being breached, but Goldman expects localized pressure in consumer finance stocks rather than widespread market declines.

Goldman Sachs trader: Last Friday's performance of the US stock market was more like "protection" rather than "exit"