Some Credit Investors Are Getting Ready for a Market Correction
- Credit-index options volume more than twice past-year average
- Surge in tail-risk hedging comes as debt ceiling, Fed loom
UBS' Tay Is Optimistic on Global Economic Uptrend
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Trading in an obscure corner of the credit-derivatives market shows that some investors are preparing for a looming sell-off in corporate bonds.
About $10.3 billion worth of options on Markit’s CDX North American Investment Grade Index -- a basket of credit default swaps on 125 North American companies -- have been switching hands daily over the past week, according to data compiled by JPMorgan Chase & Co. About 80 percent of the volume is in put options, a bearish bet against the performance of corporate credit.