Since last Friday’s 2.5 percent selloff, the ETF has seen open interest on puts surge to the highest since November 2014. Trading volume in bearish contracts has also climbed. In the four days, the SPDR S&P fund has seen average put volume of 2.5 million shares per day, compared to 1.5 million over the past three years.
“A lot of the downside skew hedging is done on the more global macro level,” said Sebastian. “Some investors are thinking they can make their dollars hedging the S&P 500 and buying the sectors that they think are going to outperform, rather than trading the individual ETFs.”
This article was provided by Bloomberg News.