14/08/18

Traders Have Never Paid So Much For Crash Protection



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Traders Have Never Paid So Much For Crash Protection
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Until very recently, tech stocks were soaring to record highs and a slump in volatility suggested investors brushing aside market risks, trade war concerns, and Central Bank tightening.

However, amid all this calm, there is at least one gauge of investor sentiment that is at full panic '11' levels. The CBOE Skew Index, which tracks the cost of tail-risk equity protection, has jumped to its highest level ever. The rise signals options traders are growing wary of wild swings, just weeks after the International Monetary Fund warned financial markets seem complacent to mounting risks in the global economy.

Generally, a rise in skew indicates that 'crash protection' is in demand among institutional investors (institutional/professional investors are the biggest traders in SPX options).

But an unusual move in the skew ....

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