Fear of Stock Market Dive Creeps Back as Hedging Costs Climb
- Options skew hedging against big fall in SPY ETF inches higher
- US CPI data, Federal Reserve rate decision approaching
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The S&P 500 Index’s surprise 16% rally this year is rewarding traders who bought in early and punishing those who’ve remained skeptical. But fear of a downturn remains.
Investors can see it in the options market, where hedging against another rout is getting more expensive. Contracts betting on a 10% decline in the SPDR S&P 500 ETF — the largest exchange-traded fund tracking the index, better known by its ticker SPY — cost 1.8 times more than options that profit from a 10% rally, data compiled by Bloomberg show.