FICC Focus
VIX, Rates Vol, Gold With Susquehanna: All Options Considered
Feb 21, 2025
In this engaging discussion, Chris Murphy, Co-Head of Derivative Strategy at Susquehanna, delves into the current state of financial market volatility and the unique behaviors of hedge funds. He highlights the low correlation in stock markets and shares strategies for capitalizing on volatility in individual stocks and commodities. The complexities of VIX call options and the recent rally in gold are also examined, providing insights into broader market expectations influenced by economic factors and Fed policies.
18:13
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Quick takeaways
- Short-dated S&P 500 volatility is at year-to-date lows, highlighting a disconnection between market optimism and rising economic uncertainty.
- The current focus on sector-specific trading strategies reflects a shift in investor sentiment, driving notable movements in individual stock performances.
Deep dives
Volatility and Economic Uncertainty
Short-dated volatility on the S&P 500 has reached year-to-date lows, reflecting contrasting dynamics in the market. Despite this low volatility, U.S. economic policy uncertainty has spiked, indicating a tension between market optimism and underlying risks. The VIX index, which measures market volatility, has remained relatively stable, hovering around 15, despite significant macroeconomic challenges like tariffs and inflation. Market participants, including hedge funds and households, are actively navigating these conditions by focusing on sector-specific volatility rather than overall index movements.
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