Leveraged Volatility Wagers Swell Like It’s 2021 All Over Again

Volatility-chasing investors are ramping up leveraged bets that the eerie calm in US stocks won’t last. With equities hovering near records and measures of price swings drifting lower, a cohort of traders are positioning for a sudden jolt.

Their conviction is unmissable beneath the surface of the exchange-traded products ecosystem tied to the Cboe Volatility Index. Leveraged funds that benefit from a spike in market turbulence have taken in their largest three-month cash injection since 2021 — a year when bets on volatility surged in the aftermath of a stimulus-fueled rally.

The recent buildup comes amid fresh policy tremors ...