Traders are closing out bullish positions in US stocks due to concerns about interest rate adjustments.
After the US presidential election, some traders bet on a continued stock rally, but the expectation of slower interest rate cuts has dampened this momentum.
A strategy involved buying puts on the Cboe Volatility Index, anticipating reduced market swings as uncertainty surrounding the election subsided.
These puts, acquired at strikes of 15, 14, and 13, proved profitable when the VIX fell below 14.
However, initially, the significant drop in option prices limited the potential gains from the volatility decrease.