Wall Street hits record put volume amid $3.2 trillion selloff
- Cboe recorded a record 11.23 million put contracts on November 5, 2026.
- Wall Street lost $3.2 trillion in market value during Thursday's selloff.
- U.S. chip stocks plunged 12 percent, marking their second-biggest fall on record.
- The CBOE Volatility Index spiked 69.7 percent to close at 28.18.
- Historical data shows the S&P 500 typically rises in the 12 months after midterm elections.
Wall Street investors purchased a record 11.23 million put contracts on November 5, 2026, as the market shed $3.2 trillion following midterm election results. This volume surpassed the previous record of 10.22 million contracts set on April 4, 2025.
The CBOE Volatility Index closed at 28.18 on November 5, an increase of 69.7 percent from its 16.61 close the previous day. The index typically spikes and then declines toward normal levels, and it is considered in high-fear territory if it closes above 30.
During the November 5 selloff, the Nasdaq Composite fell 5.5 percent and the S&P 500 dropped 4.4 percent.
Even after the decline, the S&P 500 remains 5 percent below its all-time high. JPMorgan reported that the S&P 500 experienced a 9 percent maximum drawdown this year prior to the slump, which is about half of the typical 18 percent to 19 percent pullback seen in midterm years.
Billionaires Warren Buffett and Bill Ackman issued a warning to Wall Street. Investors utilize put options for portfolio insurance, as components of spread trades, or to generate income through selling by bullish traders.
For the week ending November 6, the SPDR S&P 500 ETF Trust fell 2.7 percent and the Invesco QQQ Trust dropped 4.98 percent. On November 6, the SPDR S&P 500 ETF Trust closed up 0.32 percent at $735.36, while the Invesco QQQ Trust rose 1.4 percent to $656.10.
Investors rush to purchase market protection
Goldman Sachs reported that investors reduced downside hedges during the post-election rally on November 4, 2026, then rushed to repurchase protection as stocks collapsed on November 5.
Hedging demand is currently focused on SPDR S&P 500 ETF Trust put contracts that expire on November 20 and November 27.
Record levels of put buying indicate that investor confidence has slipped quickly as participants in the artificial intelligence-driven bull market pay for protection amid worries about valuations and spending. Extreme demand for market protection can sometimes signal a market bottom, as it leaves fewer investors who might be forced to sell once portfolios are fully hedged. If the index drops back toward its one-year average of 18.055, it would indicate that the market activity on November 5 was merely a short burst of panic.
Chip stocks and AI sector face record volatility
Chip stocks fell 12 percent on Thursday, marking their second-biggest decline on record. Alphabet reported its worst day on record, reflecting a market that has become wary of AI stocks.
The market meltdown following the Republican electoral losses on Tuesday could signal a difficult year ahead for Wall Street.
While recession is not the base case for the coming year, turbulence in technology stocks could trigger a deeper economic event. The AI investment boom is vital to the financial well-being of the United States and Wall Street, meaning a reversal could bring the risk of recession into focus. The second term of President Donald Trump suggests that many long-standing economic assumptions and market playbooks may no longer apply.
Historical midterm election performance patterns
The stock market usually rallies after elections, according to tker.co.
The only two exceptions to this post-midterm stock outperformance pattern in nearly a century occurred in 1930 and 1938.
Investment in artificial intelligence is expected to exceed $10 trillion between 2025 and 2032. Stock Advisor has a total average return of 852 percent, compared with 203 percent for the S&P 500.
Federal Reserve policy and economic outlook
Markets anticipate an additional 0.5 percentage point increase next year, totaling 75 basis points of tightening.
Data from the Federal Reserve Bank of Chicago shows the average tightening cycle since 1954 lasted 23 months and totaled 400 basis points. Wall Street appears unprepared for a more aggressive Federal Reserve, as history provides no consistent playbook for policy following midterm elections.
State Street launched the SPYMX fund, and investors reacted as if Congress will rein in the AI boom. If the post-midterm trend holds and the United States avoids a recession in 2027, investors could experience a strong year.
Market indigestion following midterm election results
Markets are currently experiencing "indigestion" as they process these new political realities.
Stock prices fell on Tuesday night, surged on Wednesday, plummeted on Thursday, and ticked up on Friday. While the elections acted as an uncertainty-clearing event, they did not provide complete clarity on the policy outlook.
Treasury yields and future market signals
The 10-year Treasury yield fell to 4.84% on November 5, 2026, down from 4.9% the previous day and below the 5.31% high recorded on October 5, 2026.
The market selloff could be calmed or resumed depending on post-midterm government actions regarding rules for data-center construction. Financing costs for companies heavily investing in AI infrastructure could be eased if Treasury yields decline further from 4.84%.
Frequently Asked Questions
- Wall Street Just Set a Record That Could Signal Trouble for the Stock Market (247wallst.com)
- US stocks always rise after midterms. Is this time different? | The Daily Star (thedailystar.net)
- JAMIE MCGEEVER | Why US stocks might buck the trend of rising after midterms (businessday.co.za)
- Billionaires Warren Buffett and Bill Ackman Deliver a Similar, Shocking Warning to Wall Street. Here’s 1 Thing Investors Should Do Now. - The Globe and Mail (theglobeandmail.com)
- State Street (STT) Launches SPYMX, Is The 14% Undervaluation Still Compelling? - Simply Wall St News (simplywall.st)
- 8 Wall Street insights after the midterm elections 🇺🇸 (tker.co)
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