Investor Demand for S&P 500 Downside Protection Plummets 75% Since March

Investor demand for downside protection on the S&P 500 has collapsed since March. The average three-month single-stock put-call skew now sits at the fourth-lowest reading in 20 years.

The hedging gauge has fallen 75% since March. That marks its sharpest plunge since the April-to-May 2025 period.

S&P 500 Put-Call Skew Slumps to 0.04

Data from The Kobeissi Letter shows the three-month put-call skew across S&P 500 single stocks at 0.04. That figure falls short of levels recorded during the 2021 meme-stock frenzy.

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The reversal is striking. In March, the same single-stock gauge sat at roughly 0.15, the highest reading since August. The broader S&P 500 index put-call skew reached nearly 0.50, near three-year highs.

A higher reading reflects heavier put-option demand and bearish positioning. A lower reading, meanwhile, indicates traders are reducing hedges and leaning into upside exposure.

The current 0.04 level suggests the market is pricing in almost no demand for crash insurance. The Kobeissi Letter explained the shift in trader behavior on X.

“Investors are no longer thinking about downside risk,” the post read.

Record Rally and Geopolitical Thaw Erase Crash Bets

The skew compression has played out alongside a record-breaking run in US equities. The S&P 500 printed a fresh all-time high in May. Since March 31, the index has appreciated more than 16%.

Geopolitics added fuel on May 21. Reports of a near-final US-Iran draft brokered by Pakistan pushed $500 billion into US equities.

With downside protection cheaper than at the peak of meme-era euphoria, the market is signaling confidence over caution. That risk-on tilt has historically benefited Bitcoin and other high-beta assets.

The next question is whether the framework can be converted into a signed agreement. If it stalls, complacency itself could become the catalyst markets stopped pricing in.

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