Hedging touches record as election sell-off hits stocks

New York

THE stock market is in free fall but for equity traders who amassed record hedges before Election Day, it is not quite as bad as it looks.

Investors had months to ponder the prospect of a rout and data from volatility markets show they spent liberally on instruments designed to cushion the blow. Billions of dollars of what amounts to equity insurance was bought and sold in the week before the election, a reprise of precautions that preceded Brexit.

One clear indication of the degree of hedging: outstanding futures on the CBOE Volatility Index has climbed steadily since June and for the last three months has been higher than at any time since the bull market began.

Trading has surged in practically every corner of the market were the securities are sold, from contracts tied to the S&P 500 Index to bets o…