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While there has been no official announcement for the same, Later Blog noticed the development on their social media profile. Social Samosa team verified the development and has also received the same feature.
The feature takes seconds to transform the curated Instagram Stories Highlights into Reels. Users can edit these Reels with the usual options available. Further, you can edit clip duration, remove clips, add content from your camera roll, and select from different audio tracks.
To convert a Story Highlight into Reels, tap on the Instagram Stories Highlight you want to turn into a Reel. Tap the three-dot menu icon and select “Convert to Reel.” (The last option in the list, refer to the screenshot above). From then on, the process is the same as creating any other Reels.
This feature may not be available to all users yet.