Bearish bets on the mini Nasdaq-100 (XND) contract rose 15% as traders hedged against a pullback. The Dec. 20 expiry after the Fed meeting is the heaviest. The index closed near 19,850.
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Bearish positioning in Nasdaq-100 options has shifted toward the mini XND contract. Put open interest climbed over the past two weeks, several options traders said.
The XND contract trades at one-tenth the notional size of a standard NDX option, making it cheaper for hedges. The put buildup concentrated at strikes 5% to 10% below the index level. Traders said the pattern suggested institutional hedging rather than outright short bets.
The move comes as implied volatility on the NDX remains elevated relative to the S&P 500. The 30-day implied-vol spread over the SPX sits near the 90th percentile of its one-year range, according to options data. That premium has made selling puts attractive. Some traders see the rich vol as a chance to buy cheap protection.
Open interest in XND puts rose roughly 15% over the five sessions through Friday, Options Clearing Corp. data show. The strikes clustered near 18,500 and 18,000. The index closed Monday near 19,850.
The XND put buying is a tactical hedge against a mean-reversion move, said a Chicago-based options market maker. If the index cracks, the vol expansion makes them more valuable.
The Dec. 20 expiry carries the heaviest put open interest, reflecting year-end positioning, traders said. That date falls after the Fed's Dec. 17-18 meeting and a quadruple witching on Dec. 19.
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