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Buying Volatility
Every day, the market has to buy volatilityn think of typically te term structure of the vix is upward sloping and cantang. You're buying deferred futures at a slightly higher price than than the nearer term futures. And that's the way the market's way of charging you for insurance. Typically, historically, when volatility is at relatively low levels, as it is now, you would see something like a premium of around 12%.