No Financial Armageddon Ahead, Options Traders Say

Options to protect U.S. banks and brokers are the cheapest since the crisis began in 2007, indicating that investors are betting financial companies will continue leading the stock-market recovery.

Implied volatility, the key gauge of option prices, for at-the-money options expiring in three months on the Financial Select Sector SPDR Fund has tumbled to 19.96 this week. That’s the lowest since July 2007 relative to equivalent options on the SPDR S&P 500 ETF Trust, which tracks the Standard & Poor’s 500 Index, showing that investors are less uncertain about financial companies relative to other stocks than at any time since the worst economic downturn since the Great Depression.