Wall Street’s Hot Volatility Trade Right Now Is Betting on Calm
- Wells Fargo, Tallbacken recommend shorting S&P 500 swings
- Near-dated measure of index vol at ‘extreme’: Chintawongvanich
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S.
Photographer: Michael Nagle/BloombergThis article is for subscribers only.
The carnage of the last seven days will have made millions for traders who wagered on panic breaking out in the stock market. Now strategists say there’s money to be made in betting everything cools down.
It’s time to consider shorting volatility on the S&P 500 Index, according to Wells Fargo & Co.’s Pravit Chintawongvanich, who echoes a slew of sell-side voices. Last week’s rout pushed expected swings on the gauge in the near-term to “extreme levels,” so the equity derivatives strategist recommends selling put options on the benchmark to profit from an imminent decline in jitters.