Traders Wary of Going Back to All-In on Stocks Weigh Up Options
- Risk reversals, call spreads are cheaper way to bet on moves
- Volatility remains elevated; hedging demand makes puts pricey
This article is for subscribers only.
After one of the wildest weeks in recent market history — the S&P 500 Index posted both its biggest one-day slump and best rebound since 2022 — traders could be forgiven for not wanting to jump back in fully into stocks. Some are now are looking into options.
Risk reversals and call spreads, strategies that involve buying a contract while selling another, are known for providing a cheaper way to bet on market direction. Now they’re especially appealing for bullish views: In recent days, calls on the S&P 500 Index have been at their cheapest in years relative to puts, data compiled by Bloomberg show.