How Polymarket traders are smartly betting on a bullish S&P 500
Polymarket traders are giving the SPY a 77% chance to hit $780 with just under $2.3k volume, but we think there might be a smarter trade to consider.
The SPDR S&P 500 ETF is up 1.6% in October, with top companies beginning to release their Q3 earnings results. The ETF tracks the 500 largest publicly traded US companies, with the likes of Nvidia, Apple, Alphabet, Microsoft, and Meta Platforms firmly part of the elite.
And with most of the top 500 companies set to announce Q3 earnings between October and November, the S&P 500 ETF can be expected to end the year strongly, thus justifying why Polymarket traders are giving it a 77% chance of hitting $780.
However, this may ultimately not be the smartest bet in the market. Given the obvious bullish expectation, could a “no bet” on the S&P 500 ETF hitting $740 be a better trade? Polymarket traders are giving it a 28% chance of happening.
As of this writing, a no bet on $740 costs $0.74 compared to $0.77 for a yes bet on $780. What’s even more interesting is the fact that to hit $780, the SPY will need to set a new 12-month high, whereas for it to hit $740, it will need to set a new 3-month low. The S&P 500 ETF has not traded below $750 since July 31.
There is just under $2,300 in volume on the SPY hitting $780, compared to over $5,000 on the $740 option. Overall, the entire market has attracted over $40k in volume.
What factors support a bullish SPY?
The upcoming earnings results are the obvious catalyst to look at, with high expectations placed on AI companies to boost market optimism. Alphabet, Amazon, and Microsoft report their Q3 earnings between October 27th and 29th, and with a combined market cap of well over $10 trillion, a post-earnings rally could help support a bullish case for the S&P 500 ETF heading into the final days of the month.
Still, even long before the earnings, investors will be pricing in expectations for the quarter as well as Nvidia’s earnings — expected on November 17— thus limiting the chances of the SPY falling to $740.
Moreover, with the Federal Reserve now highly expected to keep the base interest rate unchanged in October, this provides more optimism for investors. A no-change decision has risen from a 57% chance when we first covered the market last week to an 83% chance on Polymarket.
This page does not constitute investing advice. Prediction markets and/or gambling may result in loss of funds. You are advised to conduct your own due diligence before taking any action.
