U.S. stock options watchers warn Wall Street’s rally ‘ripe for volatility spasms’
Wall Street's recent rally has raised concerns among options watchers about potential volatility shocks. Analysts warn that the current market conditions, characterized by low demand for hedging and decreased stock correlation, could lead to a sharp pullback. The situation is seen as increasingly fragile, with signs indicating that a significant market reaction may be imminent.
- ▪Wall Street's nine-week rally has pushed U.S. stock indexes to new highs, but signs of potential volatility are emerging.
- ▪Options metrics show a lack of demand for protection against market drops, indicating increased risk.
- ▪Low correlation among stocks may mask fragility, raising concerns about a sudden burst of volatility.
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ShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountWall Street’s nine-week rally has pushed U.S. stock indexes to successive new highs, but people who watch key options metrics warn that signs are mounting that a volatility shock could be around the corner.“This is very, very ripe for what I like to call volatility spasms,” said Brent Kochuba, founder of options analytic service SpotGamma.The S&P 500 has risen nearly 20 per cent from its late March lows over nine straight weeks of gains, despite elevated oil prices and a war in the Middle East. U.S.
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