There's a Record Rush to Hedge China Stocks, Up or Down

A investor monitors stock prices at a securities company in Hangzhou in China's eastern Zhejiang province on October 18, 2018. - Shares in Shanghai plunged almost three percent on October 18 as the yuan weakened and the Federal Reserve flagged more US interest rate hikes. (Photo by STR / AFP) / China OUT (Photo credit should read STR/AFP/Getty Images)Photographer: STR/AFP

Provide news feedback or report an error

Confidential tip?

Send a tip to our reporters

Site feedback:

Take our Survey

By Sofia Horta e Costa and Michael Patterson (News)

October 23, 2018 at 8:22 AM UTC

This article is for subscribers only.

Demand for ways to hedge against wild swings in Chinese equities is going through the roof. A record 3.7 million options linked to an exchange-traded fund tracking Shanghai’s SSE 50 Index changed hands Monday, according to data compiled by Bloomberg. Open interest has also soared for both bearish and bullish contracts, signaling traders are protecting against big moves in either direction. The underlying SSE 50 Index lost 3 percent Tuesday after jumping 7.2 percent in the previous two sessions.