Demand for S&P 500 downside protection has cratered 75% since March, the sharpest plunge since April-May 2025, as equities rip to new highs. The average three-month single-stock put-call skew dropped to 0.04 this week — the fourth-lowest reading in two decades — from 0.15 in March. That means the market is pricing in almost no demand for crash insurance, and the Kobeissi Letter summed it up: 'Investors are no longer thinking about downside risk.'
A 75% plunge in crash hedge demand
The put-call skew — a measure of how much investors pay for downside protection versus upside bets — fell off a cliff. In March, the single-stock skew hit 0.15, its highest since August, and the broader S&P 500 index skew reached nearly 0.50, near three-year highs. Now both are at the floor. The current 0.04 level is cheaper than during the 2021 meme-stock frenzy, when retail traders were piling into risky options.
The S&P 500 itself has appreciated more than 16% since March 31, printing a fresh all-time high in May. That rally has made hedging look expensive — and unnecessary.
The May 21 catalyst
Yesterday, reports of a near-final US-Iran draft brokered by Pakistan sent $500 billion into US equities in a single day. That kind of geopolitical de-escalation was the final nail in the bearish coffin. Investors who had been sitting on hedges unwound them, pushing skew even lower. The timing isn't great for anyone still holding puts: they're now paying historically low premiums for protection that seems miles away.
This risk-on tilt historically benefits Bitcoin and other high-beta assets. When equities rally and crash insurance is this cheap, capital tends to flow into speculative plays. Bitcoin's correlation with the S&P 500 has been positive for most of 2026, and the current environment — low hedging costs, record equity highs, fading geopolitical risk — sets up a favorable backdrop for further upside.
The key question is how long this can last. The put-call skew at 0.04 implies the market sees no reason to hedge — a stance that could unwind fast if any new shock hits. For now, the mood is all-in on risk.
