Options Report: Volatility in Options Market Ratchets Up 4.9% Amid Hedging Ahead of Producer-Price Data
NEW YORK -- Volatility rose sharply as options traders hedged stock portfolios and took profits as the long bond's yield rose above 6%.</br></br>With the exception of precious metals, most sectors declined as Wall Street sweated in front of today's release of the producer-price index.</br></br>Traders are worried the report could be stronger than expected, which would give the Federal Reserve's policy-setting committee more of a reason to raise interest rates when it meets at the end of June. "There's a real fear out there that we could have a very aggressive Fed," a trader at a top Wall Street firm said.</br></br>In anticipation of an interest-rate increase, traders reconsidered stock prices and defensively traded options. "Taking coin and running," is how a floor broker at the Chicago Board Options Exchange described the session.</br></br>The option market's fear gauge, the CBOE's Market Volatility Index, or VIX, rose 1.19, or 4.9%, to 25.39, below its intraday high of 27.35.