(Bloomberg) -- A handful of megacap technology stocks have propped up equity markets for the past several weeks as hype surrounding artificial intelligence lures in sidelined investors.

But the fear of missing out on the rally is becoming cause for concern in the options market, says RBC Capital Markets’ Head of Derivatives Strategy Amy Wu Silverman.

The Nasdaq 100 index is up about 30% this year thanks to heavier weights in seven stocks: Apple Inc., Microsoft Corp., Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., Tesla Inc. and Nvidia Corp. — the sole chipmaker in the group which is nearing $1 trillion in market capitalization. 

When benchmark moves are driven by only a handful of stocks, “it messes with how you look at correlation in the markets and thereby it messes with what options seem to tell you,” Silverman said Wednesday on Bloomberg Television. “It seems to tell you that things are resilient when the reality is there can be very violent rotations under the surface that is masked because of the narrowness of breadth in the market right now.”

Some of last year’s worst trades have become 2023’s best, Silverman said in a separate interview. Investors have been moving into tech and out of healthcare, and into higher quality stocks instead of lower quality ones, she said.  

Silverman says the rush to tech has driven demand for call options higher than that for bearish puts as investors increasingly use derivatives as a way to place big bets on technology companies. That demand has lifted the cost of bullish options related to the Nasdaq 100, along with expected volatility. 

Read More: A Desperate Chase to Catch the Tech Rally Is Going On in Options

“This is the same exact phenomenon that we saw in GameStop, that we saw in AMC, that we saw in Salesforce,” Silverman said. “And when that happens, you can get such outsized moves that it also forces other people who are underallocated to pay attention.”

Learn how to monitor call volumes in single stocks here: Nvidia Defies Skeptics With Valuation Premised on a Sales Boom

Silverman says markets are pricing in “a little bit more relief” due to a potential debt ceiling resolution, and that’s been reflected by a subdued readings on Wall Street’s fear gauge, the Chicago Board Options Exchange Volatility Index or VIX, but the liquidity drain as a result of a debt deal could cause a “regime shift” in volatility. 

“What’s happening real time is most folks are actually rolling off some hedges they had on,” Silverman said. “But that doesn’t speak to what I think would be a longer term concern — when you see liquidity being pulled out of market in force.”

--With assistance from Tom Mackenzie.

(Updates with where rotations are taking place, in fifth paragraph)

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