Volatility Trading: The Market Tactic That’s Driving Stocks Haywire | WSJ

The pandemic has fed investors’ appetite for volatility trading, a market tactic that allows traders to bet on big market swings. But analysts say these bets have grown so popular that they’re driving more volatility, making the markets riskier for everyone. WSJ explains. Image: Jacob Reynolds

More from the Wall Street Journal:

#WSJ #Economy #Explainer

[filippofanin]

"A more volatile market is also a riskier one" : groundbreaking takeway, well done wsj

[MADMAX]

"Experts agree that the more volatile a market, the riskier"- Awwe jee, thanks Experts!

[winstonjones]

Please stay out of UVXY if you are not an experienced investor. I learned the hard way recently.

[datguyoverdere]

I love watching people finish their ramble with a grin, lookin proud they got it right! Hard to take seriously though unfortunately.

[Showmetheevidence-]

Volatility trading hasn’t attracted “investors”... it’s attracted gamblers.

[dhobbyd]

FYI, UVXY is not designed for long term holding (i.e. for hedging purposes) as the value will depreciate due to contango

[AmanC]

Good piece but not the correct explaination, basically VIX is not directly investable but there are ETFs linked to VIX index which has a convexity in returns that means downside is limited if you buy it in a stable market when VIX is between 14 to 20 but upside is unlimited with high probability of large gains which creates asymmetrical returns. These investments are mean reverting that means you cant buy and hold in the long run, you sell it as soon as you reach your return target. The huge risk comes in when you have direct exposure through short positions which can create huge losses. Hope this helps

[LeonardEisen]

I'm just here so I can understand why the next recession is gonna happen.

[carstars]

Thanks to these people to trade volatility and provide liquidity for those who need it. For me, I get excited about buying brokered CDs when they panicked sold in March/April. Sit enjoying government-guaranteed 1.3% for next 12 to 36 months until this crazy ends.

[seniorjulio]

remember folks, the derivatives market is a zero-sum game, someone HAS to lose.

[K-FOREST_Original]

As the world is, this fluidity and variability is also a process and repetition. Some are opportunities, others are crises.

[nathangrosh]

Question for Folks: I feel like this video failed to tie volatility trading to the negative effects on the overall health of the stock market. Am I missing something? At most it seems like this video made an argument that novice investors are losing money because the market is volatile, but then you might as well get mad at oil futures if that's the stance.

[numanh]

Volatility trading basically means
Take the money and RUN 🏃‍♂️

[jacobdavid]

Greed can be one's undoing. That's the takeaway! Good video!

[dennis_johnson]

Where do you draw the line on such derivatives?

[frenchmarty]

That title is such a spurious assertion.

We are coming out of a ten-year stable bull run. Volatility and risk moves in cycles. You can't infer causal relations from unrepresentative data.

[EonLimey]

Why does an innocent explanation of a derivative have a title that looks so vilifying?

[stevenwashington]

Awesome video bro! Making money in cards couldn't be easier in basketball. Buy a few hall of fame caliber players with multiple rings like Kawhi, Lebron, Curry, Kobe etc. Next, just let time pass and see a steady growth over the years. It's important to buy the right stuff though, chrome stock refractors (Prizm, Select, Optic).
By the way, if the Raptors win this year, Patrick McCaw will be the youngest player ever with 4 rings, the only active player with 4 rings. He will have more than Curry, Lebron, Durant etc. He has only been in the league 4 years and will have won 4 rings straight.
Guess who just spent a few hundred on Patrick McCaw on Comc? ;)

[TheTekkitSource]

remember kids, there are two rules in finance:
1. stocks only go up
2. short the VIX

[Hollyweed]

Learn the difference between TRADING and INVESTING