VIX at 38 Is Waterloo for the Beloved Short Volatility Trade
- Spike in volatility comes as Dow average tumbles 1,175 points
- Years of market calm shattered by rising inflation concern
VIX at Highest Level Since August as Stocks Tumble
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Of all the harrowing things seen in the stock market Monday, one was a special nightmare for investors in what has become one of the stock market’s favorite strategies.
It’s short volatility, a bet against equity turbulence that traders have been piling into for years, lifting assets in related exchange-traded products to more than $3 billion, a record. Estimates of how much money is tied up in the tactic overall vary but one estimate from Chris Cole of the Artemis Capital Advisers hedge fund puts the total at more than $2 trillion.