Investors hedge against tech sector risks amid AI-driven market concerns with put options on XLK ETF.

CDT Capital Management is increasing its market hedging strategy by purchasing put options on the State Street Technology Select Sector SPDR ETF (XLK) to protect against potential downturns in the technology sector driven by risks associated with Artificial Intelligence. This move marks a shift from their previous balanced market outlook, reflecting growing worries that AI could pose a broader threat to the financial system and stock market health. The hedge, lasting about 1-2 years, aims to mitigate inevitable market headwinds while maintaining cash and short-term Treasury bills as core hedging assets. This cautious approach signals heightened concern over technology stocks within the S&P 500 and the overall market environment.