Equity derivatives flows suggest markets are not reducing risk but reshuffling exposure as investors navigate elevated single stock volatility, crowded momentum trades and the threat of a correlation spike.
The options market is showing a market defined less by broad risk reduction and more by constant rotation, with investors shifting exposure between sectors, single stocks and thematic trades, according to Chris Murphy, co-head of derivatives strategy at Susquehanna. While index volatility remains near historical averages, the strategist say that masks significant moves beneath the surface as dispersion rises and correlations fall. The VIX is around its long term average but that’s not b