There's $2 trillion of short volatility derivatives that are being exposed right now. XIV's evaporation is going to have cascading effects.
This in the middle of a rate hike and QE unwind. In the big picture, we have a bunch of complacent buyers who've been lulled to sleep by cheap capital and near zero interest rates. When there's no moral hazard in a system, inefficiencies build up.
Anyone else appreciate what's coming on the horizon here? Short vol is the next subprime.
Submitted February 08, 2018 at 06:06PM by 0toa100 http://ift.tt/2EQ04MO
