Election Risks: How to Hedge for Surprise Results

The video tutorial discusses the significance of put-call ratios and recent trends in hedging activity, particularly around events like elections. It explores the costs and necessity of hedging, especially in uncertain market conditions. The tutorial also examines alternative volatility measures beyond the VIX, such as ETFs and currency volatility, and emphasizes the importance of finding cost-effective hedges that correlate with one's portfolio.

What has been observed in the market regarding hedging activity?

• Hedging activity is unpredictable

• No change in hedging activity

• A decrease in hedging activity

• An increase in hedging activity

Why do traders buy put options on the VIX or VXX?

• To avoid trading in the market

• To hedge against a rise in volatility

• To increase their profits

• To play for a collapse in volatility

What is a potential consequence of not hedging during uncertain events?

• Guaranteed market stability

• No impact on the portfolio

• Being in a bad spot if unexpected outcomes occur

• Increased profits

What is the VIX commonly referred to as?

• The growth measure

• The profit indicator

• The fear gauge

• The stability index

Why might investors look for alternative hedges beyond the S&P 500?

• To focus solely on currency markets

• To avoid all market indices

• To increase their risk

• To find cheaper hedges