Numbers like those make it easier to bid up companies that recently went public and those with weaker finances. An exchange-traded fund that tracks newly listed stocks, the Renaissance IPO ETF, last week posted its second-best gain this year, while a Goldman Sachs basket of companies with flimsier finances outpaced a collection of its stronger counterparts.

To Matt Lloyd, chief investment strategist at Advisors Asset Management, all the anxiety over geopolitical turmoil will eventually fade.

“People, rightfully so, are just basically saying this could happen, that could happen, but those are 30 or 40 really bad decisions in a row that have to happen for those to come to fruition,” he said. “We always confuse hiccups for heart attacks when we’re adjusting to the news — just what could happen versus what does happen usually.”

As bulls press ahead, bears have been retreating. A Goldman basket of 50 heavily shorted companies jumped more than 3 percent last week. In the options market, small traders have reduced their bearish wagers. As a result, more than two calls were bought for each put, one of the highest ratios on record, Sundial data showed.

While options are often employed as hedging tools by large speculators, small traders typically use them to make direct bets on market directions, said Jason Goepfert, president of Sundial Capital. The latest buying of calls stood out in a market where broad equity trading remained anemic, triggering a spike in its ratio as a percentage of NYSE volume.

Coincidentally or not, such indications of retail euphoria flared up in January, just before the S&P 500’s first 10 percent correction in two years. It also accompanied the bull market peaks in 2000 and 2007.

“What’s most remarkable about the jump in call volume is that it comes during a time of overall suppressed volume,” Goepfert said. “That doesn’t exactly seem like a good sign.”

With the price of call options now trading above their historic average, investors should sell them to reap extra returns in a market whose upside appears limited with valuations stretched, according to Rocky Fishman, an options strategist at Goldman Sachs. The firm predicted the S&P 500 will end next year at 3,000, or an 8 percent increase from the last close. That’d be below the 45th percentile in the index’s history over any 18-month period.

“The potential for upside surprises in U.S. equities is lower than the compensation received from elevated call prices,” he wrote in a note.

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