Options Measures Suggest Fervor for Technology Shares May Ebb
- RBC Capital says that it might be worth deploying hedges
- Volatility skew shows that extreme bullishness could be easing
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Options measures that recently were showing extreme optimism about technology stocks are now coming off, a sign to RBC Capital Markets that it might be worth deploying some hedges.
Skew, which measures the cost of bearish options versus bullish ones, had recently gone to lows on stocks like Facebook Inc. and Tesla Inc., showing not only general demand for upside, but strong speculative fervor as investors bet on big further gains. That’s reversing now, according to RBC Capital Markets derivatives strategist Amy Wu Silverman.