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Hedging in High Demand as Wall Street Questions S&P 500’s Bounce

  • Demand for single-stock protection is highest since March 2020
  • S&P 500 will bottom near 3,500, results of MLIV’s survey show
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We May Not Have Reached a Bottom, Says JPM's Stubbs

Risk appetite is making its way back in the stock market, but among options traders, concern is high that the selling isn’t over yet. 

One of the key signals for the options market -- demand for hedging against losses in individual companies -- shows that a seven-week rout did little to tame traders’ appetite for the hedges. In fact, the ratio of put to call contracts on individual stocks on the Cboe rose to the highest level since March 2020. While protection appetite subsided on the index level after a 19% S&P 500 slump, traders are still guarding against single-stock blowups.