Greek Contagion Concerns Attract Bears to Spain, Italy: Options

Traders are buying up protection should Greece’s potential exit from the euro trigger a domino drop in Spanish and Italian stocks.

Investors pulled out of exchange-traded funds tracking the equities, while driving up costs to hedge against declines. The price of bearish options versus bullish ones on the iShares MSCI Spain Capped ETF hit a 20-month high last week, and the cost of the contracts on the iShares MSCI Italy Capped ETF jumped 27 percent since early December, according to data compiled by Bloomberg. Benchmark stock gauges of Italy and Spain rebounded today, up more than 0.8 percent, while Greece’s ASE Index completed its best two-day gain since November.