Energy Stock Rally Leads to Hedging as Prices Don't Match Profit
- Protection costs for SPDR energy ETF highest since January
- S&P 500 Energy Index has rebounded 13 percent since August low
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A quick rebound from a four-year low that sent energy stocks to the highest valuations in the Standard & Poor’s 500 Index has investors jockeying for downside protection.
Implied volatility on an exchange-traded fund tracking energy companies is at its highest in 10 months versus another ETF mirroring the S&P 500, according to data compiled by Bloomberg. The increase signals rising demand for options used to hedge against losses in energy shares that have climbed 14 percent since bottoming out in August.