If you want to bet that the S&P 500 will march even higher, be prepared to fork out a sizable sum. A record number of investors are happily paying up.
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Short interest on the largest ETF tracking the S&P 500 is the lowest level on record.
January 9 -
Rarely have investors had such consistent, steady gains, and abundant anomalies, says one expert.
January 3 -
Conventional wisdom is that 60/40 portfolio is highly effective. But there could be a better way to accompany large-cap U.S. stocks than U.S. bonds.
November 27
As U.S. stocks trade at all-time highs, the price tag on bearish options has dropped to a trough relative to bullish contracts. The spread between the price of one-month, 25-delta puts and calls for the S&P 500 is roughly two standard deviations below its five-year mean, data compiled by Bloomberg show. It’s an indication of the greed — or lack of fear — in the market suppressing the Cboe’s volatility gauge.
The persistent decline in put prices — paying less for downside protection — drove the downtrend in the measure known as skew during most of last year’s second half. Since Jan. 3, investors chasing upside have led to an increase in the cost of calls, contributing to the historically significant level of bullish positions, the data show.
Even contracts offering minuscule upside have surged: January 2,750 calls closed at more than $33 on Tuesday, up from 55 cents on Dec. 29.
Many U.S. stock funds posted double-digit percentage gains, but international equities fared even better. Which were the biggest winners?
More than 5.4 million S&P 500 calls have already changed hands in 2018, the most on record to kick off the new year. The average ratio of bearish-to-bullish options volume over the past 25 days is near the lowest since last March.
