Credit Suisse's Xu Expects Volatility to Be Lower in 2019

The video discusses the VIX as a measure of market uncertainty, highlighting its limitations as a risk barometer. It explores trends in VIX options, investor behavior, and the shift away from VIX as a hedging tool. Factors such as liquidity and underperformance in market sell-offs are analyzed. The video also covers hedging strategies and market outlook for 2019, emphasizing the importance of stock replacement strategies. Finally, it examines cross asset volatility, noting the normalization of macroeconomic factors and their impact on rates and FX.

What is the primary role of the VIX in the market?

• A measure of investor sentiment

• A risk barometer

• A measure of market uncertainty

• A tool for predicting stock prices

Why did investors start moving away from using VIX as a hedging instrument?

• VIX options became too expensive

• VIX options were harder to monetize during stress

• VIX options provided higher returns than S&P options

• VIX options were banned by regulators

What was a significant trend in VIX and S&P option volumes at the end of the year?

• S&P option volumes decreased

• Both VIX and S&P option volumes decreased

• VIX option volumes increased significantly

• VIX option volumes remained low while S&P option volumes hit a record high

What is the expected trend for market volatility this year according to the annual outlook?

• Volatility will increase significantly

• Volatility will remain the same

• Volatility will likely decrease slightly

• Volatility will be unpredictable

What has been the trend in cross-asset volatility, particularly in rates and FX?

• Cross-asset volatility has increased

• Cross-asset volatility has normalized and hit new lows

• Cross-asset volatility has remained unchanged

• Cross-asset volatility has become more unpredictable