Options Are Signaling a More Placid Stock Market Through Yearend
- Markets in a ‘sweet spot’ for volatility, Susquehanna says
- Hedging shows investors may be willing to add long exposure
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U.S. equity investors who have endured some of the widest price swings on record amid the worst pandemic in modern times could be in for a respite as 2020 comes to a close.
Current 30-day implied volatility on the S&P 500 is around 19, compared with 81 in the February-March period when stocks plunged as much as 35% as Covid-19 rocked financial markets. While that metric is high compared with recent history, having averaged 7 for all of 2019, the push and pull of options investors suggests stocks may trade within a tighter range through yearend.