Utility Bears at Five-Year High as Bond Yields Increase
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The cost of hedging against losses in utility shares has risen to a five-year high after rising bond yields made dividends less appealing and short sellers boosted bearish bets.
A gauge of options prices known as implied volatility has risen 8.8 percent to 14.19 in the past month for the Utilities Select Sector SPDR Fund, an exchange-traded security tracking power companies, according to data on three-month contracts compiled by Bloomberg. Implied volatility for the utilities ETF was 1.73 points above the Standard & Poor’s 500 Index ETF on Dec. 26, the most since October 2008.