Investors are bracing for more market volatility as traders buy up hedges at the fastest clip since the start of the Covid-19 pandemic. According to Cboe data, call options betting that the Cboe Volatility Index (VIX) will rise are the highest on an average day in February than at any time since March 2020. After not much movement for months, the VIX, which is also known as Wall Street’s fear gauge, rose above 23 last week, its highest level since the first few trading days of the year. Readings below 20 usually signify complacency, while readings above 30 signal investors are looking for protection. The increased demand is due to two reasons. First, when stocks rebounded at the start of the year, investors jumped back into the market, restoring a need to hedge their portfolios. In addition, recent economic data increased the likelihood that the Fed will be forced to continue raising interest rates to slow inflation, stalling the stock rally. The S&P 500 saw three consecutive weeks of declines, which was capped by a hotter-than-expected reading on the personal consumption expenditures price index, the Fed’s preferred gauge of inflation. The CME Group Volatility Index, which tracks volatility in the Treasury market, also recently reached its highest levels in more than a month.

Finsum:Investors are bracing for more volatility in the market as call options betting that the VIX will rise are at their highest mark since the start of the COVID pandemic.