Forward Guidance Volatility Hedge Fund Manager Unpacks Derivatives Misconceptions | Benn Eifert
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Feb 20, 2025 
Benn Eifert, Managing Partner at QVR Associates and an expert in volatility-focused hedge fund strategies, breaks down misconceptions surrounding derivatives and volatility. He discusses the intricacies of risk management in turbulent markets, highlighting challenges of tail hedges and the allure of 'free lunch' finance. Eifert also critiques Stephen Miran’s tariff arguments, exploring the interplay of trade, currency value, and the complexities of U.S. economic positioning. Tune in for insights that demystify options trading and explain the real cost of portfolio protection.
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Derivatives Markets Drivers
- Derivatives markets are driven by end-users like pension funds and retail investors, not arbitrageurs.
- These flows create pricing inefficiencies that vol-focused funds exploit.
Volatility Trading Tools
- Options are the fundamental building blocks of volatility trading, reflecting uncertainty about future prices.
- Volatility and variance swaps offer simpler, purer volatility exposure but can be risky.
Volatility Fund Strategy
- Target absolute returns, aiming for performance unrelated to market beta.
- Seek opportunities in market crashes when dislocations create profitable trades.