Some of the bullish trades put on in the days around the US presidential election are being unwound as the prospect of slower interest-rate cuts have helped halt the stock rally. 

One of the trades was to buy puts on the Cboe Volatility Index, betting that swings would ease with stocks gaining after uncertainty surrounding the presidency was cleared away. Puts snapped up at 15, 14 and even 13 strikes paid off when the VIX dropped below 14, even if over the first couple of days the cost of the options dropped so much that the crush in volatility wasn’t enough to boost the value of the contracts.

While the relief of a quick resolution to the election pushed shares to record highs earlier this month, the focus has since returned to interest rates, earnings and the nuts and bolts of the new administration. The S&P 500 Index lost 2.1% last week.

“Now that the initial rally started to fade, traders have realized that there’s a high degree of uncertainty coming with the Red Sweep,” said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group. 

Technology stocks were under pressure Friday, and positioning shifted away from the extreme bullishness in early November. Nvidia Corp., the artificial intelligence leader that has the biggest weighting in the S&P 500, saw heavy selling of call options expiring Friday, just days before its earnings this week. 

“We see investors reducing long exposure to big tech stocks and making speculative bets on biotech and consumer staple food stocks that can be negatively impacted by Trump’s policies,” Murphy said.

The positioning shift was even more stark in biotech firms, as shares of vaccine makers were hit after prominent skeptic Robert F. Kennedy Jr. was nominated to lead the Department of Health and Human Services. 

One-month implied volatility and put skew on the SPDR S&P Biotech exchange-traded fun reversed almost all of their post-election declines. Investors bought bearish contracts on the ETF, according to Daniel Kirsch, head of options at Piper Sandler.

There was also hedging across European ETFs on concerns over tariffs, according to Kirsch. 

“Enthusiasm since the election has started to fade as the market grapples with a higher dollar, higher rates and the recent cabinet appointees.”