Volatility-based investing has dramatically risen in popularity over the last decade as investors have become increasingly sophisticated, diversifying from a simple portfolio of stocks and bonds. In fact, there have been days when trading volume in CBOE VIX derivatives exceeds that of the SPDR S&P 500 ETF (SPY). But there are issues investors must consider, noted an August TABB Group report titled “Volatility ETPs: When Traders Cash in on Turbulence.” Investors who don’t recognize how to maximize the benefits and avoid the pitfalls might experience disappointment. Volatility trading steadily rising The use of volatility-based investment products has significantly increased over…
TABB: When Investing With Volatility Products, Watch Roll Costs, Asset Depreciation
Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.