read moreRather than positioning for a quick rebound, as they have typically done in recent past, traders in the options market are laser-focused on defensive plays.
Options market measures, including skew - a gauge of demand for upside vs downside - show investors extremely concerned about further weakness for U.S. stocks.
Meanwhile, the Cboe Volatility Index (.VIX) an options market gauge of expectations for near-term volatility - jumped to a two-month high of 26.96 on Wednesday, highlighting investors' jangled nerves.
The VVIX Index (.VVIX), which measures the cost of hedging with VIX options, jumped as high as 145.5 on Wednesday.
The VVIX being north of 120 points to a market that is "wound really tight," Nomura's McElligott said.
Randy Frederick, Charlie McElligott, Chris Murphy, Nomura's McElligott
Nasdaq, Schwab Center, Financial Research, Nomura, Susquehanna, Thomson