Economics
How to Prepare for Inevitable Time When Volatility Explodes
- Price swings tend to spike quickly, not increase gradually
- SocGen seeks relative value trades; straddles for Schaeffer’s
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Low volatility sounds like a good thing in markets. And it can be, unless it’s masking or ignoring problems. The real trick is preparing for an end that can be quick and unpleasant.
“Volatility rarely picks up bit by bit. It tends to spike when the late-cycle bullish narrative goes off the rails,” Cantor Fitzgerald LP’s Peter Cecchini wrote in an email.