Investors are loading up on protection against a fresh round of financial turmoil in US regional bank stocks as lenders prepare to reveal how badly their earnings have been squeezed by the troubles that took down Silicon Valley Bank.
Regional bank share prices have stabilised since SVB’s collapse sparked a massive mid-March slide, but traders are buying record amounts of options tied to midsized lenders that had some of the highest volatility, according to Bloomberg data. Several banks that were badly hit in the recent volatility — including Citizens Financial, Charles Schwab and Keybank — have seen options interest hit record levels, while many more are at multiyear highs.
Pricing of the contracts suggests investors expect stock swings for some banks to be up to three times normal levels, according to analysis by RBC Capital Markets.