Investors are buying record amounts of insurance contracts to protect themselves from a sell-off that has already wiped trillions of dollars off the value of US stocks.
Purchases of put option contracts on stocks and exchange traded funds have surged, with big money managers spending $34.3bn on the options in the four weeks to September 23, according to Options Clearing Corp data analysed by Sundial Capital Research. The total was the largest on record in data going back to 2009, and four times the average since the start of 2020.
Institutional investors have spent $9.6bn in the past week alone. The splurge underscores the extent to which big funds want to insulate themselves from a sell-off that has dragged on for nine months, and has been supercharged by central bankers across the globe aggressively raising interest rates to tame high inflation.