NEW YORK - JPMorgan's equity derivatives strategists predict an increase in the Cboe Volatility Index (VIX) for the upcoming year from the current levels, which are nearly at pre-pandemic figures of around 12.5.
This uptick is contingent upon economic performance, with VIX expected to reach mid-to-high teens in the event of a soft landing and low twenties if a moderate recession occurs.
To navigate this uncertainty, JPMorgan endorses the use of put-spread collars on the S&P 500 as prudent hedges. These strategies involve buying put options at a lower strike price while selling them at a higher one, combined with owning the underlying asset, to provide protection against market downturns.
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