(Bloomberg) -- While the S&P 500 Index's on-again, off-again recovery from this month's slump is a sign of investors' indecision about whether it's safe to move back into stocks, the options market is sending a clearer signal.
The cost of protecting against declines in the biggest exchange-traded fund that tracks the U.S. equity benchmark has fallen hard and fast as stocks clawed back their losses from the Feb. 8 low.
When stocks bottomed out, traders were paying the most for 30-day puts on the SPDR S&P 500 ETF Trust relative to calls in more than two years. Now, with the benchmark having gained around 7 percent from this month's low and trading within 3.5 percent of its record high, the relationship between those prices is back around its five-year average.
The S&P 500's rebound after a 10 percent plunge from last month's all-time high has been choppy, with the gauge frequently rising in the mornings and then slipping back during the session's last few hours. It swung between a 0.3 percent gain and a loss of as much as 0.8 percent Tuesday as investors weighed new Federal Reserve Chairman Jerome Powell's assessment that the central bank won't rush to raise rates even though he expects the economy to pick up steam.
To contact the reporter on this story: Richard Richtmyer in New York at rrichtmyer@bloomberg.net.
To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, Morwenna Coniam, Joanna Ossinger
©2018 Bloomberg L.P.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
