NEW YORK, April 10 Reuters Popular funds that sell options for income may be moderating the recent bout of volatility in U.S. stocks, extending the calming effect they have had on the market for the last several months.

Assets under derivative income ETFs, funds that use a mix of stock and stock derivatives to generate income, have grown to about 71 billion from 33 billion at the end of 2022, according to Morningstar data.

Some options mavens believe these funds and other optionsselling strategies have tempered stock gyrations, another reason equity markets have enjoyed a long period of calm. The Cboe Volatility Index, Wall Street39;s fear gauge, in late March fell to its lowest in two months, as strong earnings and expectations of rate cuts this year sent stocks marching higher.

The trades may also have moderated recent volatility as the VIX has climbed to hover near a sevenweek high of 16.92 hit on Friday, on mounting worries the Federal Reserve may not deliver as many rate cuts as expected without an inflationary rebound.

The SP 500 stands near record highs, yet it logged two straight days of 1 swings last week, the first such move in about two months.

While several factors may have kept volatility from flaring even higher, the presence of volatilityselling funds was one moderating force, said Alex Kosoglyadov, managing director for equity derivatives at Nomura.

There39;s been tremendous growth in these ETFs, QIS Quantitative Investment Strategies and in mutual…