SVB debacle sparks rush to defensive options on fears of contagion

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Traders piled in to defensive options on bank stocks on Friday, a day after a tumble in the shares of SVB Financial Group sparked worries over the lender's stability and fueled a rout in the sector.

Though SVB's troubles for now appear idiosyncratic to the firm, traders appeared on guard for the possibility that they could bode poorly for the broader sector as a campaign by the Federal Reserve to fight inflation by ending the era of cheap money is exposing vulnerabilities in the market.

Puts offer the right to sell shares at a fixed price in the future and are typically used by traders looking to guard against a drop in stock prices.

 

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