

Hedge funds flock to hybrids to trade macro uncertainty
Firms repurpose structure made popular by Trump trades last year
Hedge funds are turning once again to hybrid options – a standout feature of 2024’s wave of ‘Trump trades’. This time, though, firms are using the structure to express views on tariffs and the threat of recession.
Investors placed high numbers of hybrid option bets on US exceptionalism in 2024, as they correctly predicted that a victory for Donald Trump in November’s election would drive US equities and rates higher and strengthen the US dollar.
Trump’s tariff policy has since whipped up fears of
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