Stock Turmoil Sparks a Wall Street Hunt for Cheap Hedges
- BofA recommends ‘put fly’ trade; MRA touts bearish ETF options
- Pockets of value remain despite high level of S&P 500 skew
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The bad news for investors who waited this long to buy equity hedges is they’ve become eye-wateringly expensive. The good news is Wall Street thinks there are a few cheap strategies left.
A gauge tracking the price of bearish S&P 500 options versus bullish contracts -- or skew -- sits near an all-time high, according to Goldman Sachs Group Inc. Yet even now there are pockets of value for those waking up to risks like a U.S. recession, worsening trade war or Hong Kong unrest.