Options — The Striking Price: Stocks Are Trading More Like Bitcoin. How to Profit. — Barron's

By Steven M. SearsAmericans may vehemently disagree about politics, but they increasingly agree on this: They love U.S. stocks. And they're not alone. International investors increasingly want our stocks, too.That insight is often overshadowed by negative media coverage of President Donald Trump, and especially over his plans to use tariffs to reshape the global order.But recent earnings reports from Charles Schwab and Interactive Brokers Group show that an intense desire to own U.S. stocks is emerging as one of the big themes of 2025.Rather than retreating to the safety of money-market funds, or watching the markets without trading, investors are increasingly embracing the volatility around Trump's policies.Schwab reported that strong transaction volumes drove a 60% increase in its second-quarter net income.Interactive Brokers reported a 170% quarterly increase from 2024 in overnight trading volume, helped by international clients who want U.S. market access — and who are able to trade 10,000 U.S. stocks and exchange-traded funds, equity index futures and options, and bonds outside of regular U.S. trading hours.Should the U.S. dollar remain weak — which seems to be a goal of the Trump administration — global consumers will likely find that U.S. goods will be cheaper. The phenomenon should further boost U.S. stocks with international sales.The initial data points from two important brokerages is a positive for the U.S. stock market. It indicates strong demand for U.S. stocks, especially on declines.We raise this point as many pundits and strategists are advising clients to hedge stocks in anticipation that primary benchmarks, like the S&P 500 index, may soon back off record levels.Sure, there are always risks, especially when markets are at record highs, as they are now. But many investors seem to be taking a page from the playbook of crypto investors, who are increasingly active in the stock and options markets.The price of Bitcoin has enjoyed extraordinary ups and downs, yet Bitcoin investors tend to stay invested. When the crypto markets are at their worst, crypto investors remind each other to HODL, for "Hold on for Dear Life." Stock investors, conversely, often panic and sell. The influence of crypto investing styles on stock investors is too little appreciated.The next few weeks of corporate earnings reports should make the world's burgeoning love affair with U.S. stocks more apparent. Earnings results have thus far been good, and more positive news should strengthen investors' bullishness. In addition, any good news from Trump's tariff negotiations is likely to be interpreted as even more reason to buy stocks.Investors can position for more stock market upside without sharply increasing their risk with call-option spreads. The strategy — buying a call and selling another with a higher strike price but the same expiration — increases in value if the associated securities increase in price.With the SPDR S&P 500 ETF at $628.86, investors can buy the September $635 call for $12.96 and sell the September $650 call for $5.89.If SPY is at $650 at expiration, the spread is worth a maximum profit of $7.93. The risk: That the ETF is below $635 at expiration, which would mean the trade fails.Aggressive investors could also sell a September $615 put option for $8.75. The put sale positions investors to buy SPY at $615. If the ETF is above $615 at expiration, investors keep the premium.The continued embrace of U.S. stocks anticipates a continuation of the status quo. Any diversions from the script could trigger stock volatility — but stay cool and HODL. Over time, you'll be glad you did.Email: [email protected] subscribe to Barron's, visit http://www.barrons.com/subscribe