Drug Merger Boom Sends Hedging Costs to Eight-Year High
This article is for subscribers only.
Takeover-fueled gains that have made health-care companies America’s best-performing stocks over the past three years are pushing up the cost of hedges, too.
Implied volatility, the main gauge of options prices, on drug and device makers reached the highest level in eight years this month relative to the Standard & Poor’s 500 Index, according to data compiled by Bloomberg. The increase comes as proposed mergers and acquisitions worth $285 billion helped send health-care stocks up 84 percent since the start of 2011, the most of any industry.