With Fall Tail Risk All Around, BofA Says Get Synthetic With Hedges

This fall could be an eventful one, even when compared to a relatively eventful August. Everything from the US Federal Reserve starting to gradually withdraw quantitative stimulus from the veins of the markets to a US debt ceiling showdown and various moves from major developed market central banks around the world to bank analysts saying the global market cycle is over could face investors come fall. But don’t worry, say the equity derivatives research team at Bank of America Merrill Lynch. The answer is to hedge with synthetics.

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The market is showing signs of Tulip mania

Analysts at HSBC Holdings Plc, Citigroup and Morgan Stanley think investors are ignoring obvious...