What’s With All This Hedging?

The S&P 500 is at new highs which we must label as a positive.

That hilarious quote comes from JC O’Hara, an analyst at FBN Securities Inc.

You’ll note that it has a kind of fatalistic tone to it – something like: “well, I guess we have to say this is a positive development although it’s by no means clear that this is any semblance of sane.”

A more generous interpretation might be this: “we’ll take it.”

But just because folks will “take it” doesn’t mean they aren’t nervous. Indeed, as Bloomberg’s Dani Burger (who, despite being left off a list compiled by her own employer, is undoubtedly the world’s best “burger”) writes on Tuesday, the S&P put/call ratio is sitting at its highest level in more than two years:

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Meanwhile, the cost of protection on high-flying tech stocks hit a one-year peak just as the NDX touched a new high earlier this month: 

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The takeaway: if you’re long and unhedged, one of two things must be true. Either you know something everyone else doesn’t or the other way around.