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Macro & Volatility™
Macro & Volatility™ #2: Dispersion - time to start paying attention
Jun 16, 2024
The podcast delves into the dispersion trade's impact on VIX spikes, drawing parallels to past market volatility. It explores risks in leveraged short volatility trades and discusses hedging strategies like purchasing puts or investing in the VIX. The conversation also highlights opportunities in purchasing stocks strategically during market shifts.
08:27
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Quick takeaways
- Dispersion trade involves owning individual stock options and shorting index volatility, reflecting historical parallels in market conditions.
- Being aware of risks in leveraged short volatility trades and considering volatility positions as a hedge against potential market downturns are crucial.
Deep dives
Similarities to Historical Market Conditions
The podcast discusses how the current equity and macro environment closely resemble conditions seen in early 2018, prior to significant volatility spikes like the 'Volmageddon' incident. These similarities include good economic data, strong earnings, and rising interest rates. The focus is on the dispersion trade, a strategy involving owning individual stock options while shorting index volatility, which is currently trading at historically low levels.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode