By Saqib Iqbal Ahmed

NEW YORK (Reuters) - U.S. stocks are at fresh records, bitcoin is soaring and investors are spurning insurance against portfolio declines as evidence that the economy is headed for a so-called soft landing whets market participants' appetite for risk.

Call it the Goldilocks trade - a bet that the Federal Reserve will be able to tame inflation while keeping growth from declining too rapidly. While that outcome was in doubt as recently as last month, investors have been reassured by a more recent spate of economic data - including Wednesday’s report showing U.S. consumer prices slowed more than expected in April.

Investors' newfound renewed penchant for risk-taking can be seen across asset classes. The S&P 500 hit a new record high on Wednesday and is up 11% year-to-date as it rebounds from last month's decline. The Nasdaq Composite Index and Dow Jones Industrial Average scaled fresh heights as well.

Assets such as bitcoin and meme stocks, which are often seen as barometers of risk appetite though their ties to economic fundamentals are often questioned, have also soared.

Meanwhile, participants’ growing confidence was reflected in a survey of fund managers by BofA Global Research: the firm’s broadest measure of investor sentiment, based on cash levels, equity allocations and economic growth expectations, stood at its most bullish since November 2021.

"Investors' appetite for risk assets appears to be on the rise," said Garrett DeSimone, head quant at OptionMetrics.

Here's a chart-based look at how investors' new found optimism is reverberating throughout markets:

After worries over the Federal Reserve's ability to cut interest rates in the face of stubborn inflation prompted a 4.2% pullback for the S&P 500 index in April, investors now appear eager to ride stocks higher.

Many are opting to do so with little attention to hedging their downside. The Cboe Volatility index, which measures demand for protection from market swings, closed at a four-month low on Wednesday. The lesser-known VVIX index, a gauge of how much investors expect the VIX to move, has also dipped and now stands near its lowest level in about a decade.

While there are few takers for options hedges that would guard against a drop in the market, call contracts that would benefit from further stock market gains are in high demand.

The one month average daily trading in calls outnumber puts 1.2-to-1, the most bullish this measure has been in about a month, according to data from Options analytics firm Trade Alert.