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Aggressive options trading in the semiconductor stocks is creating a volatility spread that’s being used by traders to stay bullish in the sector that’s rallying the most, while simultaneously hedging risks in the broader market.
The trade is fairly simple: sell downside protection in semiconductor names where volatility is expensive, and buy downside protection in the S&P 500
, where it’s relatively cheap, with VIX this week touching the lowest levels in three months.
Here’s why it’s uniquely compelling at this juncture.
