Investors are placing bets on a surge in market volatility around the G20 summit next month, as US President Donald Trump and Chinese President Xi Jinping have downplayed the chances of a breakthrough in talks to resolve their trade dispute.
Bond yields have already plummeted, stock prices have fallen and the Vix index of market volatility has risen as hopes of a quick end to the dispute have been dashed. Investors are now using derivatives markets to position themselves for further turbulence at the two-day summit.
Trading data show that investors have piled into options contracts expiring on Friday, June 28, the first day of the summit in Osaka, Japan, which would offer protection if stock prices plunge.