Investors Ditch Hedges as Put-to-Call Skew Hits Lowest Since April 2025
The 1-month put-to-call skew has fallen to 1.15 points, its lowest since April 2025, signaling that investors are paying less for downside protection. Meanwhile, the 3-month call skew has surged to a 12-month high, reflecting strong demand for upside bets.
The 1-month put-to-call skew, a gauge of how much more investors pay for downside protection versus upside bets, dropped to 1.15 points, matching levels last seen in April 2025. The metric has fallen by 0.13 points over the past four weeks, a decline similar to the one that followed the 'Liberation Day' selloff and subsequent tariff pause relief rally earlier that year.
At the same time, the 3-month call skew climbed to 0.9 points, the highest reading in at least 12 months. This skew measures the premium for far-out-of-the-money call options, which only pay off in a large market rally, relative to at-the-money calls.
The combination of declining put demand and surging call appetite suggests that investor risk appetite is 'off the charts', as noted by The Kobeissi Letter.
Source: The Kobeissi Letter