NEW YORK (Reuters) - Options players are piling in to riskier bets across the U.S. stock market, supporting a rally that has come on the back of fading election worries and expectations of a Republican lock on power in Washington next year. 

The bullish plays span a wide array of assets, from electric car maker Tesla to small-cap stocks and regional banks. Together, they have helped drive the S&P 500's gain of 3% since the Nov. 5 vote.

"We've got this relief from this big risk," said Garrett DeSimone, head of quantitative research at OptionMetrics. "It's just across the board ... you've got everything, with the exception of bonds, going up." 

Options traders adopted a defensive posture ahead of the election to hedge their portfolios from possible election-related volatility, including worries over a result that might be too close to call immediately or contested.

Many are now shifting to a bullish stance, wary of underperforming a market that has rallied following a victory by Donald Trump and Republican control of both houses of Congress, which had been anticipated following the election and was projected by Edison Research on Wednesday. The result is expected to give Republicans a freer hand in pursuing their economic agenda, which includes tax cuts and looser regulations. 

Investors are "panicking to chase stocks at all time highs," said Charlie McElligott, managing director of cross-asset strategy at Nomura, in a note earlier this week.

The volume on daily call options - which profit when stocks rise - has outnumbered puts by a ratio of 1.5-to-1, compared with 1.3-to-1 during the rest of the year, data from Trade Alert showed.

Net call volume across single-stock options jumped sharply across most sector groups after the election, according to Deutsche Bank. 

More broadly, the volatility landscape has changed dramatically, with the Cboe Volatility Index - a measure of demand for portfolio protection - sinking to a near four-month low of 13.67.

"What the volatility market was worried about didn't come to fruition, so all that excess worry came out of the market," said Michael Thompson, co-portfolio manager at boutique investment firm Little Harbor Advisors. 

McElligott cited heightened demand for call options in a range of names including in options on iShares Russell 2000 ETF ARK Innovation ETF, SPDR S&P Regional Banking ETF ( KRE ) and the VanEck Semiconductor ETF ( SMH ).

The swing from worry to upside speculation was visible in the options on Tesla, with investors pouring in to call options as the stock soared after the election on bets that CEO Elon Musk's close ties with Trump may benefit the EV maker. 

Tesla options accounted for about 30% of the total U.S. stock options traded in notional terms on Monday, data from Nomura showed.

Investors' overall rush into bullish options may be helping fuel the rally in stock prices, analysts said.

"When you get these investors that pile in to calls ... this information moves into the stock and then you see the increase in the stock itself," according to OptionMetrics' DeSimone.

TEMPERED OPTIMISM

Of course, the so-called Trump trade could be in for twists and turns ahead, as details of the timing and implementation of the Republican policy agenda become clearer. Investors are also wary that parts of Trump's economic platform, such as tax cuts and tariffs, could stoke inflation. 

Some of those concerns have been reflected in a recent rise in Treasury yields, which could present an obstacle for stocks if it continues. 

Stocks fell on Thursday after Federal Reserve Chairman Jerome Powell said there was no need for the central bank to rush interest rate cuts given the strong economy. The effect of Trump's policies on economic growth will not become clear until new laws or administrative edicts are approved or issued, he added.

That could be one reason why some measures of investor enthusiasm remain far from the euphoric levels reached in past market rallies. 

For instance, one gauge of S&P 500 skew - which measures the relative demand for bullish calls versus bearish puts - has fallen to 4%, from a level of 7% just before the election, indicating investors have grown less defensive. But it has been even lower at various times this year, including in May, when it stood at 3%. 

"This suggests markets are maintaining some degree of caution rather than displaying complete complacency," DeSimone said.