Options metrics show weak hedging, rising market fragility
Investors chase upside, call skew inverts, leaving market vulnerable to disorderly pullback
Record-low stock correlation may mask fragility, volatility event likely if catalysts emerge
By Saqib Iqbal Ahmed
NEW YORK, June 3 (Reuters) – Wall Street’s nine-week rally has pushed U.S. stock indexes to successive new highs, but people who watch key options metrics warn that signs are mounting that a volatility shock could be around the corner.
“This is very, very ripe for what I like to call volatility spasms,” said Brent Kochuba, founder of options analytic service SpotGamma.
The S&P 500 .SPX has risen nearly 20% from its late March lows over nine straight weeks of gains, despite elevated…
