Stocks have gotten crushed over the past six days, and no area has been hit harder than the tech companies so responsible for pushing the market higher.
Traders are running scared, and also paying a heavy premium to hedge against further losses in tech. The cost has rarely been higher over the past decade.
The stock market has been in meltdown mode all week, which means traders are watching their backs.
They’re loading up on hedges to protect against further wreckage. And their urgency to do so has pushed costs to exorbitant heights.
That’s been especially true for the formerly red-hot tech sector, which, until recently, was the unstoppable engine driving the market to new highs. The cost to hedge against further losses in tech has skyrocketed to levels seen on just a few occasions in the last several years.
And can you blame investors? The tech-heavy Nasdaq 100 index has dropped 8.8% over the past six days, outpacing losses in the benchmark S&P 500 by more than two percentage points.
A measure called skew, or the premium options traders are paying to protect against a 10% loss in the …read more
Source:: Businessinsider – Finance