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It’s Never Been Cheaper To Hedge Highly Speculative Tech Companies
While many have noticed the demise of volatility in the US equity markets – 104 days without a 1% drop, plunge in VIX, record low monthly ranges – it is the most highly speculative and most over-valued companies that appear to be the biggest beneficiaries of peak animal spirits. It has never been cheaper to hedge stocks in the Nasdaq…
The great moderation of risk is nearing unprecedented lengths…
While expectations of short-term stock volatility is jumping…
The Nasdaq 100's 'VIX' has plunged to its lowest on record…indicating investors are anticipating milder fluctuations in the technology-focused gauge.
On a side-note, we see that HYG vol had crashed to its lowest in 3 years before surging in the last week…
Relative to S&P 500 VIX, Nasdaq 'risk' is forecast at the lowest in 4 years…
But while 'normal' risk appears to have disappeared, the 'extreme' risk of tail events is surging once again…
Which makes some sense – with Dutch, French, and German elections looming over EU existence, binary fiscal policy outcomes in the US fully priced in, and a Fed seemingly determined to hike rates no matter how weak the economic outlook becomes, any of these catalysts will lead to serious pain (that a hawkish Fed won't be able to rescue).
Source: http://silveristhenew.com/2017/03/14/its-never-been-cheaper-to-hedge-highly-speculative-tech-companies/
