"Everyone In The Room Is Selling Volatility": When It Rises, Sell More
Volatility was once just a measure. Now it's an income-generating product. Everyone is selling it says Pennant Capital.
"We are pretty late in the game," says Alan Fournier, founder of Pennant Capital in an interview with James Grant.
Video Length: 00:03:20
Fournier tells Grant about a recent experience in which he made a presentation to a group of pension investors at the request of an investment bank.
Following his presentation, Fournier mentioned selling volatility to the host. The host replied "I want you to know that everyone in this room is selling vol."
Fournier's presentation was to a group of large European pension funds.
Fournier described their strategy. "When they get a selloff, they sell more."
This is the Nifty-Fifty and LTCM on steroids. Some major pension plan is going to get carted out with a total loss at some point.
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I certainly look back over the past year and wished I had shorted volatility or bought puts on UVXY. But I know if I started now, it would likely be at the tail end. I'm willing to miss whatever is left of the short vol trend if it keeps from taking on too much risk.
$VXX cfd is short sellers' paradise +add EU with allowed CFD products and you are very happy trader.