Some call trades before and after the usa presidential election are being closed as the slowing pace of interest rate cuts curbs the stock market's rebound.

One such trade involves buying put options on the cboe global markets volatility index (VIX), with some traders betting that once the uncertainty surrounding the presidential election is resolved, volatility will decrease as the stock market rises. When the VIX falls below 14, put options with strike prices of 15, 14, and even 13 have yielded returns, as the cost of the options decreased so much in the initial days that the decline in volatility was still insufficient to increase the value of the contracts.

Although the relief brought by the swift resolution of the presidential election led the usa stock market to reach a historic high earlier this month, the market's focus has shifted to interest rates, yields, and the specific operations of the new government. The s&p 500 index fell by 2.1% last week.

Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, stated, "As the initial rebound begins to fade, traders realize that the 'red wave' brings a high degree of uncertainty."

Usa technology stocks came under pressure last Friday, as investors shifted their positions from extremely bullish since early November. Nvidia, a leader in the ai sector and the largest weighted company in the s&p 500 index, saw a massive sell-off of call options that expired last Friday, just days before the company was set to announce its earnings.

Murphy noted, "We see investors reducing their long exposure to large technology stocks and making speculative bets on biotechnology and consumer staples, which may be affected by Trump’s policies."

This shift in positions is more pronounced among biotechnology companies, as the share prices of vaccine manufacturers were hit after prominent vaccine skeptic Robert Kennedy Jr. was nominated to lead the Department of Health and Human Services.

According to Daniel Kirsch, the options manager at Piper Sandler, a month of the SPDR S&P biotechnology etfImplied volatilityand the skew of put options has nearly reversed all declines since the election. Investors bought put contracts for this etf.

According to Kirsch, due to concerns about tariffs, investors in europe etf also began to hedge. "The enthusiasm since the election has started to fade as the market struggles to cope with the appreciation of the dollar, rising interest rates, and recent cabinet appointments of the new Trump administration."

Editor/rice