A trader works on the floor of the American Stock Exchange AMEX) at the New York Stock Exchange (NYSE) in New York, US, on Wednesday, May 6, 2026. Michael Nagle | Bloomberg | Getty Images Aggressive options trading in the semiconductor stocks is creating a volatility spread that's being used by traders to stay bullish in the sector that's rallying the most, while simultaneously hedging risks in the broader market. The trade is fairly simple: sell downside protection in semiconductor names where volatility is expensive, and buy downside protection in the S&P 500 , where it's relatively cheap, with VIX this week touching the lowest levels in three months. Here's why it's uniquely compelling at this juncture. Implied volatility in the VanEck Semiconductor ETF (SMH) is 46, more than 2.5 times that of the S&P 500, where the Cboe Volatility index (VIX) trades around 17.…