The S&P 500 volatility skew hit its lowest level since mid-2024 as traders sold their downside hedges to buy bullish calls. The premium paid to insure against a market drop shrank significantly relative to the cost of betting on further gains. The Federal Reserve holding rates at current levels is the primary catalyst for this positioning shift, which also pulled implied volatility lower across foreign exchange, credit, and equity markets. Gold breaks this pattern with both volatility and skew increasing, signaling demand for protection against sharp upside moves or safe-haven scenarios. Some deep out-of-the-money puts retained demand, suggesting the most sophisticated market players have not completely abandoned their hedging frameworks despite the broader shift toward bullish positioning.
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