Korean Stock Hedges Cheapen With $3.2 Billion of Bullish Bets

South Korea’s presidential election last week has sparked the biggest equity surge in more than four years. Options traders are betting there’s more to come.

As the Kospi 200 Index rallied 8.4% in the past six days, the cost of hedging against declines has tumbled. The measure known as skew is now hovering around its lowest level since last July after a series of newly created, big bullish options block trades.

The latest came on Tuesday: Some 21,000 calls betting on a 4% rise in the Kospi 200 from that day’s close in the coming month traded for 2 ...