Heavily Hedged Traders Have Been Awaiting a Stock-Market Storm
- Short interest on SPY and credit-centric funds has surged
- Investors are on edge due to Russia tensions, hawkish Fed
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Whatever happens in Ukraine or how it affects Federal Reserve policy, the outcome will land in markets where investors have had time to prepare for the worst. It may be one reason the worst has so far been avoided.
They’ve been steadily boosting bets against equities, shaking off a reluctance to short tracing to last year’s meme stock upheaval. Bearish bets on the largest exchange-traded fund tracking the S&P 500 have surged, while put open interest on bond-focused products has risen to historic levels. Meanwhile, professional managers have been hedging their credit exposures.