“In October, short sellers were looking for more short exposure in the more crowded equities (both retail and indexed), energy and healthcare stocks; international stocks and bonds; and VIX volatility while decreasing short exposure to the broader U.S. market and U.S. interest rate related securities,” Ihor Dusaniwsky, managing director at S3 Partners, told Investopedia. “If the market stabilizes and continues its rally, there may be $21 billion of October short sales ready to be covered and boost the rally even further.”
Related: U.S. Bond ETFs Experienced Record Trading Volumes in October
Fogertey argued that the shift in options positions reflected investors’ adjustments to existing hedges and portfolios due to current market conditions, so investors should not interpret the hedges as a bearish signal for the markets.
For more information on the markets, visit our current affairs category.