Blogs & Comment

Hedging oil risk

If the price of crude oil doesnt stop rising soon, stock markets are in for a swoon, judging from sell-offs today and yesterday. So how much further will oil rise?
I dont know. What I do know is that hedging against this risk might be a good idea even for the Canadian market as highlighted by todays drop in the broad index — even though the price of oil climbed yet again.
In Canada, put options on the iShares CDN S&P/TSX 60 exchange-traded fundare one solution. Right now, such put options can be purchased relatively cheap. The Montreal Exchanges Implied Volatility Index (MVX)did tick up today but the present reading, near 17.25, is still considerably below the peak of 32 reached in January.