In Crisis-Hit Brazil, ETF Traders Actually See Less Volatility
- Cost of three-month options at 2014 low vs 30-day contracts
- Political developments may increase volatility in short term
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Investors are betting on calmer days ahead for Brazilian stocks, according to options trading on the biggest exchange-traded fund tracking the country’s equities.
A measure of volatility for the iShares MSCI Brazil Capped ETF reached its highest level since the end of 2014 versus one tracking the U.S. stock market. But traders see the turmoil as temporary, betting volatility will drop by 9 percent in the next three months amid speculation a change of government can pave the way for needed reforms.