The options structure can be a useful tool for identifying market participants’ outlook.
In 2020, global equities followed a sharp V-shaped pattern. Even while the cash market staged a strong recovery, implied volatility in the options market remained well above historical averages. We last checked in on October 30th, 2020 (“Options and the Presidential Election”), using the S&P500 index options to see what the market thought about the November 2020 election. At the time,