The Impact of Passive Investing on Market Dynamics

In this episode, Kris Sidial joins Jack Forehand and Brent Kochuba to break down the mechanics of tail risk hedging, why most volatility strategies fail, and how his team approaches dislocations in the market. We explore what's really driving volatility behind the scenes, the evolving market structure, and why the current environment may be far more precarious than it appears. If you’ve ever wondered how professional vol traders monetize chaos—or why volatility can stick around far longer than people expect—this episode is for you.

Topics Covered:

What tail risk funds are and why many of them underperform

How to build a long volatility strategy that doesn’t bleed capital

Why rebalancing is a critical component of portfolio resilience

Liquidity fragility and how it amplifies market moves

Retail's role in the latest rally and the fading institutional bid

Structural risks created by passive flows and policy shifts

Monetizing volatility spikes

The psychological traps that lead to poor volatility trading decisions

Why volatility might stay elevated for far longer than most expect