Market volatility has increased tremendously and traders love it. Volatility has exceeded recent highs, and in certain instruments such as Hang Seng futures and options, has reached all-time highs. Indices have been going up and down in large amounts, not just for limited bursts but continuously.
Is it time to start trading volatility? Unfortunately not, because that train has left the station already.
If you were not already positioned with a long-biased view on volatility before those markets started gyrating, it is now too late to do so, unless you pay through the nose for it. Trying to buy volatility has become a lot more expensive, for example, in the form of higher options premiums.
So what happened to those hedge funds smart enough to have been positioned long in volatility?
