Opinion: Investors increase exposure to stocks and cryptocurrencies in preparation for US election volatility

"We continue to see interest in U.S. election trading, which has picked up in recent days," said Daniel Kirsch, head of options at Piper Sandler & Co. "Clients who expect Trump to win the election are increasing their exposure to financial and cryptocurrency stocks, while clients betting on a Harris win are buying options on renewable energy stocks. Hedging has also increased, with traders buying puts on the S&P 500 and QQQ ETF." Short-term S&P 500 implied volatility has been high relative to one-month levels as the impact of the election and Fed rate hikes filter into the calculation of short-term indicators. The Cboe VVIX index, which measures VIX volatility, is also high. "Right now, options skew is very high, with VIX well above realized volatility," said Zhiwei Ren, portfolio manager at Penn Mutual Asset Management. "These are signs that market hedging is in place right now." (Bloomberg)