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2017-09-30 — nytimes.com
After peaking at close to 90 at the time of the financial crisis, the VIX recently sank to a multidecade low of just below 9, the occasional sharp spike upward notwithstanding. (As of Wednesday afternoon, it was 10.5.)
Several factors have helped along the way, analysts say. They include aggressive money printing and bond purchasing by global central banks and the profusion of exchange traded investments, which make it cheap and easy for professionals and amateurs alike to bet on a falling VIX. Now, just a month ahead of the 30th anniversary of Black Monday, when the Standard & Poor's 500 stock index plunged 20 percent, Mr. Cole is wagering on a similar calamity, underpinned by a vicious spike in the VIX and a steep sell-off in stocks. ... Artemis Capital is of a slightly different stripe. It is, as Mr. Cole likes to say, a hedge fund with a capital H. That means, in times of bull market fever, the fund will bet on a reversal, offering downside protection for cautious investors by finding creative ways to purchase exposure to financial chaos. These trades entail purchasing a variety of derivative instruments that pay off if there is a dramatic upward spike in the VIX, which can cause stocks to fall precipitously. Of late, money managers seeking such a hedge have grown markedly. Mr. Cole, who started with $1 million in 2012, is now sitting on $200 million, and demand has been so strong recently that he expects to hit $300 million soon, at which point he will restrict further access. ... "In 1987, we were in a bull market, and the Fed was behind the curve with regard to inflation and interest rates," Mr. Cole said. "What could cause a crisis now is if rates suddenly spike higher, share buybacks seize up and then the volatility sellers turn into volatility buyers all at once." source article | permalink | discuss | subscribe by: | RSS | email Comments: Be the first to add a comment add a comment | go to forum thread Note: Comments may take a few minutes to show up on this page. If you go to the forum thread, however, you can see them immediately. |