Market panic is looming again, warning of rising hedging costs in US stocks and downward risks.

Notice that, under the dual pressure of tariff policies and economic concerns, the S&P 500 index plummeted 1.8% on Friday, marking its worst single-day performance since April. Option market data shows that fears of an economic downturn are fermenting in the market. Throughout the trading session on Friday, tech giants to energy and financial sectors faced widespread selling. The trigger was: weak July job growth numbers, which intensified concerns in the market that President Trump's comprehensive tariff policies are beginning to weigh on the economy. The Cboe Volatility Index (VIX), also known as the "Wall Street Fear Index," jumped to nearly 20 levels - a sign that market pressure is building up. Currently, the cost of hedging against a market crash is becoming increasingly expensive. Put options contracts for the S&P 500 index ETF trust show that the cost of buying insurance for a potential 10% drop in the next 60 days has risen to the highest level since the regional bank crisis in May 2023 - compared to the cost of hedging against an equivalent increase. Chris Murphy, co-head of derivatives strategy at Susquehanna, analyzed, "This is not panic selling but a cooling of market enthusiasm. The hype around meme stocks is fading, systemic positions are close to the top of the range, so the demand for upward protection is weakening. With signs of tariffs and economic slowdown after such a strong rally, there is no reason to buy protection against upward movements. This phenomenon suggests that after the S&P 500 index surged 25% since early April due to Trump's tariff offensive, sparking months of speculation, investors are now buying risk protection for the next two months. As the market enters its worst August and September in the history of the S&P 500 index, traders are ramping up their downside protection measures. According to Deutsche Bank data, commodity trading advisors (CTAs) are holding the highest level of long positions in stocks since January 2020, at the 94th percentile. These quant funds typically follow a "buy the dip, sell the rally" strategy. While this shows confidence in stocks, it also means that if the market environment changes suddenly, it could trigger a sharp reversal. Currently, investors' anxiety remains focused on the short term. The skew index of S&P 500 index options - which measures the cost of protecting stock portfolios - has been climbing but is still far below the levels before the sharp drop in early April.