Investors Protecting Stocks at Record Eye Bets on Higher Rates

As the US SP 500 keeps setting records, investors are increasingly buying protection — not from imminent stock declines but against the risk of rising inflation and interest rates driven by tighter oil supply amid the Iran war. Traders have favored call buying on big tech ahead of earnings, supporting the rally, but strategists (UBS, Lombard Odier) recommend re‑engaging hedges such as equity put spreads or rate‑volatility trades (e.g., 30‑year swaptions) as a more direct hedge against a “rates shock.” The short‑term narrative is earnings from Alphabet, Meta, Microsoft and Amazon, but market participants may rotate attention to oil, inflation and real yields, which could produce a sharper equity downside than a VIX spike.