How Headwaters Volatility CIO Is Playing Volatility

The video discusses the current earnings season, focusing on the volatility in the market, particularly between JP Morgan and Wells Fargo. It explores the rationale behind institutional selling of volatility, influenced by factors like the Fed put and trade uncertainties. The discussion also covers the strategy of going long on volatility, emphasizing the importance of timing and the current low implied volatility on the S&P.

What is the main reason for the mixed outlook in the earnings season?

• High inflation rates

• Rising interest rates

• Increased consumer spending

• The Fed pause

Why are institutions selling volatility despite uncertainties like Brexit?

• To reduce portfolio risk

• To gather premium due to low yield

• To increase liquidity

• To hedge against inflation

What role does the Fed put play in the selling of volatility?

• It provides a safety net, reducing downside risk

• It raises interest rates

• It increases market volatility

• It decreases market liquidity

What is a key challenge in executing a long volatility strategy?

• Regulatory restrictions

• Lack of market information

• Timing the market correctly

• High transaction costs

Why might investors not need a major market crash to profit from low implied volatility?

• Due to government intervention

• Because of increased consumer confidence

• Due to the current low level of implied volatility

• Because of high interest rates