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Speaker 1: Hello, and welcome to another episode of the Odd Thoughts Podcast.

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Speaker 1: I'm Tracy Hallaway and I'm Joe. Wasn't thal Joe? Yes?

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Speaker 1: Did you know? Did you know that the VIX futures

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Speaker 1: This is super dramatic, it's not that interesting. Did you

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Speaker 1: know that the VIX futures curve has been inverted or

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Speaker 1: kind of inverted for I think like six months now,

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Speaker 1: basically since February. I didn't realize it was then, but

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Speaker 1: I didn't realize it had been six months. So basically

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Speaker 1: that means that investors are hedging again. It's higher volatility

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Speaker 1: out in the future than they are right now, or

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Speaker 1: the other way around, the other way around, so it

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Speaker 1: means people are paying more for volatility protection in the

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Speaker 1: near term than they are in the future. But that's unusual,

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Speaker 1: or at least it's counter to how the VIX curve

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Speaker 1: normally looks. Normally, the VIX curve is upwards sloping because

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Speaker 1: there's more uncertainty further out into the future, and so

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Speaker 1: you pay more for that volatility insurance. So kind of

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Speaker 1: unusual to have the VIX curve downwards sloping for this long,

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Speaker 1: And I guess it's one of those things that that

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Speaker 1: tells you that we're in an interesting place when it

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Speaker 1: comes to markets at the moment. Yeah, I mean it

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Speaker 1: makes sense that people are paying up more for short

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Speaker 1: term hedging right now because we obviously are just in

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Speaker 1: extraordinary times. You know, you look out a little ways

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Speaker 1: one year, two years, you could sort of envision a

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Speaker 1: return to normal, but it feels like we're in a

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Speaker 1: period where anything could happen tomorrow, whether it's policy, whether

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Speaker 1: it's related to the virus, etcetera. And so yes, sort

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Speaker 1: of intuitive that people want hedges in the here and now. Yeah,

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Speaker 1: of course the big event risk on but can I say,

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Speaker 1: can I say something though, go on, No, this is

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Speaker 1: something that's always bothered me, and maybe we'll get into

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Speaker 1: this with our guest today. But I don't understand why

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Speaker 1: it's not always like that, because I understand that most

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Speaker 1: of the time people want to pay out for some

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Speaker 1: protection because the future seems like less certain than the presence.

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Speaker 1: So I get that in theory. But on the other hand,

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Speaker 1: one of the central like sort of like dogmas of

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Speaker 1: finance is that you know, over the long term, things

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Speaker 1: to things go up, the economy improves, stocks go up, etcetera.

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Speaker 1: So it always seems to be like it should actually

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Speaker 1: be the other way around, where it's like, in the

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Speaker 1: short term anything can happen, but in the long term

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Speaker 1: things are smooth. So I've never really understood the premise

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Speaker 1: of why VIX futures curve slope upward in the first place.

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Speaker 1: But anyway we can, we can get into that later. Yeah,

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Speaker 1: I mean, there are dozens and dozens of exchange traded

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Speaker 1: products whose very existence is predicated on the VIX curve

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Speaker 1: upwards in normal times. Um, but yes, we should, we

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Speaker 1: should ask the question. I guess, all right, well, you've

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Speaker 1: already sort of given it away. But in this episode,

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Speaker 1: we're gonna be talking about the current volatility regime. And

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Speaker 1: I was about to mention that there is a very

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Speaker 1: big event risk coming up on the horizon, which is

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Speaker 1: the US elections, and we've seen a lot of talk

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Speaker 1: about volatility hedging ahead of that. We're going to get

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Speaker 1: into that, and we're also going to talk about some

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Speaker 1: of the longer term changes in volatility market structure, including

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Speaker 1: maybe even why the VIX futures curve is normally upwards sloping.

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Speaker 1: Now I'm super excited about this one. I mean, it's

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Speaker 1: obviously been an extraordinary year, I think due to the

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Speaker 1: rise of these sort of discrete events, whether it's the

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Speaker 1: the virus itself, the big thing that's coming up on

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Speaker 1: November three of this year, which could be uh producing

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Speaker 1: extraordinary amount of uncertainty. There's been so much interest um

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Speaker 1: in uh what volatiary futures or vict futures curves on

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Speaker 1: all sorts of asset classes are sort of anticipating on

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Speaker 1: how wild things could get. We also, as we spoke

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Speaker 1: about with Ben Eifford a few weeks ago, there's the

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Speaker 1: emergence of this whole class of sort of retail derivatives

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Speaker 1: buyers call options buyers also sort of breaking historical patterns

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Speaker 1: potentially in terms of how hedging markets look. So this

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Speaker 1: is an extraordinary rich topic to dive into, and although

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Speaker 1: we've hit it in some ways in the past, it

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Speaker 1: doesn't feel like we can never really talk about it enough. Yeah,

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Speaker 1: I totally agree. So our guest for this particular episode

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Speaker 1: is Chris Sidile. He's the co c i O over

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Speaker 1: at Ambrosk Group, basically a volatility arbitrage trader, and he's

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Speaker 1: been in that particular space for well many years now.

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Speaker 1: So the perfect person to talk to us about the

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Speaker 1: current volatility trading regime. Chris, welcome to a THOTS. Hey,

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Speaker 1: good morning, Thank you. Then meet so I guess to

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Speaker 1: begin with, you know, Joe asked that question about why

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Speaker 1: the vix curve is normally upward sloping. Can you maybe

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Speaker 1: explain to us what you've seen over the past few

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Speaker 1: months in terms of how the market is pricing volatility

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Speaker 1: and what's changed. Why is the vixed curve downward sloping?

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Speaker 1: What are you saying in terms of ptging demand and

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Speaker 1: things like that? Right, So, uh, it's very easy to

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Speaker 1: tell that everybody is fixated on the December ball, right,

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Speaker 1: and it's for good reason to write. You have the

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Speaker 1: potential resurgence of the comtavirus, you have the election time hotility,

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Speaker 1: you have the potential for corporate earning blagging. Thanks for

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Speaker 1: pointing this week. So that's pretty big, especially because of

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Speaker 1: not everything that's been taking place in trading on the

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Speaker 1: baby side. So everybody has been fixated on December ball,

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Speaker 1: and there has been a constant bid um. Even back

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Speaker 1: in late August, we've seen that correalition break between Vixen

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Speaker 1: Spot and you know, people were watching that that was

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Speaker 1: a little bit supply and demand driven. We we understand

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Speaker 1: that there was a big player in the market that

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Speaker 1: helped propel that due to some of the dealer gama hedging, etcetera, etcetera.

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Speaker 1: I could go on for for hours about that one.

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Speaker 1: I think people have a concern about the upcoming catalysts,

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Speaker 1: and we're being across the scope pre hedging that's taking place,

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Speaker 1: you know, not only with some of the larger players,

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Speaker 1: but you're seeing it with the smaller guys too, with

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Speaker 1: some of the you know, registered advisors. You know, they're

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Speaker 1: basically instructing their clients, you know, go out, make sure

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Speaker 1: you protect yourself. So it's been a constant bid involved

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Speaker 1: at that level. You know. I've been tweeting this is

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Speaker 1: that when the term structure is so elevated, like what

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Speaker 1: we see involves so bit up, it's very difficult to

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Speaker 1: get that added convexity in the move. And what I

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Speaker 1: mean is that when Vault is so pre bid, it's

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Speaker 1: somewhat priced in al right, so people are kind of

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Speaker 1: anticipating this. People are pre hedged the move that you

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Speaker 1: need to get VIX to like a seventy or eighty.

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Speaker 1: It has to be real panic and real fair in

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Speaker 1: the market, and you won't get that if guys are

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Speaker 1: pre heads, right, because let's think about it in the

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Speaker 1: most basic conceptual way. If you have a book, all right,

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Speaker 1: let's just say you're running a million dollar books, right,

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Speaker 1: and you have your heades on them and the market

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Speaker 1: is down seven right, your pre heads. So you're not

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Speaker 1: gonna go and rush to the exit door right to

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Speaker 1: sell off your positions because you really have your heads.

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Speaker 1: And when you have that across the entire landscope, right,

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Speaker 1: it becomes much more difficult to get volved to to

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Speaker 1: really get going. It's like that example of like what

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Speaker 1: causes the vex to really if you have a whole

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Speaker 1: bunch of people in the room and they're all trying

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Speaker 1: to get to the exit door at the same time.

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Speaker 1: But in this case, no, So I mean just just

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Speaker 1: sort of like to I mean, if you just sort

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Speaker 1: of think about over the last several months, March was

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Speaker 1: sort of like the mother of all panics, probably one

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Speaker 1: of the biggest panics in the history of Wall streets.

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Speaker 1: And since then it's just been nothing but fear of

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Speaker 1: a second wave, fear of ongoing economics sort of fall out,

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Speaker 1: fear of a policy mistake, fear of the election, everything

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Speaker 1: going wrong, massive reason to hedge and stay out of

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Speaker 1: the market. But as such, it's hard to get actual

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Speaker 1: intense selling when essentially so many people were already have

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Speaker 1: already been fearful, right, right, So it's uh, it's that

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Speaker 1: pre hedged position that will disable all from going through

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Speaker 1: the group, right, It needs to be uh, somewhat of

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Speaker 1: a fear factor. And I was saying this that in

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Speaker 1: order for VALL to really get going in December, you

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Speaker 1: need a fresh catalyst, all right, So the the election

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Speaker 1: time just isn't enough to really get the ball to

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Speaker 1: go through how people are anticipating. And you were seeing

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Speaker 1: that in the divergence between d v I X and X. Right,

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Speaker 1: I X is VOLA And what we're seeing is the

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Speaker 1: market is not really fearful. You're seeing a divergence between

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Speaker 1: the two, and it's showing us that, yeah, guys are

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Speaker 1: are pre hedged, but there isn't a massive rush to prehdge.

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Speaker 1: Don't get me wrong, right, there is a potential for

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Speaker 1: a fresh catalyst, right like, granted a Biden election, right now,

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Speaker 1: you have to think you have to immediately shift your

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Speaker 1: focus into the trade wards, right, if a Biden election

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Speaker 1: takes place, Because what if we wake up the next day,

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Speaker 1: right we find out Joe Biden is the president. One

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Speaker 1: week later we hear China's like, okay, guys, well sorry,

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Speaker 1: you know, we need to reassess these this trade deal

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Speaker 1: that we were talking about, right, So, a fresh new

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Speaker 1: catalysts like that, or you know, something just completely out

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Speaker 1: the woodwork could be enough to get the market to

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Speaker 1: get going. But it's very difficult to get volatility to

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Speaker 1: really proof like a vix um a X move to

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Speaker 1: seventy or eighty on things that are already pre priced.

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Speaker 1: I just don't think that the velocity of the move

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Speaker 1: will be there without a new catalyst that isn't already predetermined.

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Speaker 1: M So one of the questions I have based on

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Speaker 1: that is if everyone is pretty well hedged going into

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Speaker 1: the presidential elections, who is actually selling vall exposure at

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Speaker 1: the moment. So that's a really good question. Um, there

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Speaker 1: are people that are out there that are taking advantage

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Speaker 1: of this, and and you know they're looking to sell all.

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Speaker 1: We actually know a couple of institutional guys who are

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Speaker 1: trying to take advantage of this, but no they I

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Speaker 1: think they are resting there in a more sophisticated way

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Speaker 1: where they are um hedged off. But I would not

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Speaker 1: suggest this to the average retail guy because there are

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Speaker 1: a lot of complexities that go in to do this.

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Speaker 1: With the recent correlation break in spotting VIX, it's very

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Speaker 1: difficult to determine what the market is going to do.

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Speaker 1: You can't have too much conviction that sid because you

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Speaker 1: could have a situation where Spott is down and ball

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Speaker 1: is down, all right, or you could have an inverse

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Speaker 1: of that situation, right, So you can't be too sure

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Speaker 1: of what exactly is going to take place historically and statistically.

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Speaker 1: Right now, I'm very confident enough to say that the

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Speaker 1: trade is short volatility. Right Statistically and historically, there are

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Speaker 1: no numbers that I think an individual could pull up

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Speaker 1: that can lead me to say that the trade is

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Speaker 1: not shootball. However, as a trader, and you know, as

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Speaker 1: a risk manager, you look at this from a different standpoint,

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Speaker 1: right because you look at this and you say, Okay,

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Speaker 1: the data makes sense, the numbers line up, but there's

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Speaker 1: been so much variability in do we really want to

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Speaker 1: take this shot? Right? So there are a million other

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Speaker 1: trades out there that we could take, we're not expressing

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Speaker 1: the the view which with so much conviction, right, So

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Speaker 1: you know, we could be short a little bit of

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Speaker 1: all in the book to try to capture that, but

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Speaker 1: the risk to reward from what we've seen in I mean,

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Speaker 1: has just been one of those years where I feel

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Speaker 1: like I call it the critosis here because everything that

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Speaker 1: is like a two delta, a five delta and under

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Speaker 1: is just has been hitting like we've been seeing it

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Speaker 1: left and right. And you want to talk about just

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Speaker 1: life in general, right, like God rest his soul, Kobe

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Speaker 1: Bryant died from a helicopter crash. Right, you're just thinking

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Speaker 1: about every little thing you you want to talk about

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Speaker 1: the election. I'm a fairly young guy, but I have

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Speaker 1: not seen a year where there's been so much variability.

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Speaker 1: So with everything taking place, it's very difficult for me

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Speaker 1: to say, Okay, I'm just going to fixate on the

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Speaker 1: numbers and most specifically, I'm just gonna say, like you know,

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Speaker 1: I'm just gonna capture that the VRP and and short

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Speaker 1: ball here because the wrist of awards just doesn't really

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Speaker 1: pan out. I'm actually I'm really curious about these sort

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Speaker 1: of other opportunities you identify. So of course, okay, they

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Speaker 1: say the statistics line up and say you should probably

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Speaker 1: be short vall because the sort of realized volatility UM

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Speaker 1: going into the election is probably not going to be

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Speaker 1: as high as the headgers are positioned for, and statistics

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Speaker 1: suggest there's probably some money to be made there and

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Speaker 1: taking advantage of all the fear. What are the other

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Speaker 1: things that you look for in terms of opportunities that

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Speaker 1: aren't the sort of simple directional bets on one way

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Speaker 1: or another up or down in volatility. Yeah, so we

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Speaker 1: look for, um, a little bit of regression in some

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Speaker 1: relative value things. I think earning this season is really

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Speaker 1: really promit. I think it's going to for guidance, is

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Speaker 1: going to really paint the picture for us, and I

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Speaker 1: think reality will set in a little bit because um,

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Speaker 1: I'm anticipating a little bit of a slowdown in corporate

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Speaker 1: earning uh this cycle. So there are ways to capture

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Speaker 1: that spread between some of the single names in certain sectors, right,

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Speaker 1: so we don't necessarily need to be Mega's focused on

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Speaker 1: you know, vix up. You know, we look to express

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Speaker 1: some of our views and in some of the sectors

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Speaker 1: with single names and then also the ets right. So

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Speaker 1: for example, if we're looking at a you know, the

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Speaker 1: cues to i w M. You know, maybe we think

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Speaker 1: the cues are trading relatively rich and i WM this

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Speaker 1: trading relatively cheap from from a ball standpoint, right, maybe

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Speaker 1: thirty day implied ball or you know, we we like

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Speaker 1: to focus on the wings, so we'll be looking at

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Speaker 1: how is Kurtosis trading, right, is the five delta and

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Speaker 1: underputs or five delta and under calls trading relatively cheap

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Speaker 1: or expensive? So I think this earning cycle brings up

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Speaker 1: an opportunity for a lot of dispersion. And I think

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Speaker 1: you'll see disparity in a few different sectors. So I

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Speaker 1: think people could look to focus on that. And I mean,

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Speaker 1: you know, from just eliminating okay, like ball itself this

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Speaker 1: election time, it's very important in relationship sectors, right, think

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Speaker 1: about how important the oil sector is, Think about how

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Speaker 1: important healthcare sectors, think about how important the energy Like

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Speaker 1: those sectors are heavily reliant on who will be the

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Speaker 1: winner of this election, right, because it's night and day

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Speaker 1: for the turnout for that. So you know, I think

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Speaker 1: investors could and should focus on um some other areas besides,

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Speaker 1: oh yeah, I think you know, volatility is going to spike.

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Speaker 1: I think if you look at the volatility on individual

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Speaker 1: names and and certain sectors that could present um a

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Speaker 1: little bit bit more opportunity there, then oh yeah, I'm

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Speaker 1: just gonna play like a calendar spread and you know,

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Speaker 1: sell January balls and by December balls or vice versa.

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Speaker 1: I wanted to zoom out a little bit and and

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Speaker 1: sort of move away from the near term concerns about

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Speaker 1: potential fat tails and the upcoming election and talk about

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Speaker 1: vol utility trading over the past few years. So one

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Speaker 1: thing that we hear a lot is that central banks

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Speaker 1: have artificially suppressed volatility through their various unconventional monetary policies.

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Speaker 1: But we also hear from various guests. You know, Ben

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Speaker 1: Effort's a good example of that, or Chris Cole from Artemis.

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Speaker 1: We also hear that Wall Street or traders and the

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Speaker 1: sort of ecosystem around volatility trading has actually, in effect

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Speaker 1: also had a hand in suppressing volatility as well. I'm

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Speaker 1: just curious to get your take on that. If you

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Speaker 1: look at ball now, how suppressed would you say it

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Speaker 1: actually is and what would you attribute that too? Is

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Speaker 1: it central banks or is it the way big ball

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Speaker 1: players are actually dealing in the space at the moment.

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Speaker 1: First of all, shout out to be Ben, such a

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Speaker 1: good dude, I love that. But yeah, so vulatility is

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Speaker 1: absolutely suppressed, but we're not seeing the same level of

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Speaker 1: suppression as we were seeing pre the covid um because

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Speaker 1: a lot of these short ball funds and a lot

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Speaker 1: of the funds that just focused on selling you know,

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Speaker 1: like the ten delta put or you know, it's put

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Speaker 1: or whatnot, those guys are kind of those guys have

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Speaker 1: been kind of blown out, all right, So you're not

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Speaker 1: really seeing the level of suppression that we were seeing

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Speaker 1: pre covid However, there I should say that this is

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Speaker 1: on a relative level because it's still a very heavy

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Speaker 1: amount of mulatility suppression that's going out there. Central banks

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Speaker 1: are absolutely suppressing volatility, and I think the way how

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Speaker 1: global rates are actually set up right now, it is

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Speaker 1: it's a big problem. I mean, you know, you have

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Speaker 1: to look at it like this, with global rates being

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Speaker 1: so low. If you are an allocator, you are just

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Speaker 1: who's just fixated on on generating a return. What can

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Speaker 1: you do in this market? Right? Are you gonna go

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Speaker 1: buy corporate bonds where you have to take on the

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Speaker 1: same sort of default risks as you would with an equity,

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Speaker 1: Or are you gonna go buy a treasury where you're

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Speaker 1: yielding like zero percent? Right? There comes to point time

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Speaker 1: when you're looking at at the the menu and you're

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Speaker 1: saying yourself, all right, you know, I might as well

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Speaker 1: just be invested in equity. Right. So what global arrates

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Speaker 1: beings so low? Its forces new players who aren't really

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Speaker 1: in the market to now move into this new spectrum. Right.

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Speaker 1: And with that you also have this this interesting dynamic

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Speaker 1: taking place with structure products just blowing up. Right, you

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Speaker 1: have I mean I was doing the exotics could be

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Speaker 1: a mode and I can tell you for a fact.

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Speaker 1: You know, January before UM the COVID situation was an

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Speaker 1: amazing month. People were eating structure products. The appetite for

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Speaker 1: it is huge. Right. So you think about everybody who

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Speaker 1: is in the investing role now, right, they want a

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Speaker 1: piece of They want a little bit of everything compiled

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Speaker 1: into one. Right, So they want a little bit of

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Speaker 1: health care, they want a little bit of check, they

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Speaker 1: want a little bit of UM energy, and they wanted

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Speaker 1: all on one little one basket right, hence the growth

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Speaker 1: of EPP products. But what we are seeing is this

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Speaker 1: dynamic is actually taking away from market crept. So if

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Speaker 1: you were to look at the main components in the

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Speaker 1: spy and the queue, right, the components that are in

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Speaker 1: the two are the same thing, right, It's basically the

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Speaker 1: exact same thing, right. So what what this is telling

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Speaker 1: you is that the market is being driven or no breath. Right.

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Speaker 1: So as much as people want to diversify and they're

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Speaker 1: just trying to diversify, their portfolio is creditated on the

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Speaker 1: large name, right. So with the growth of structure products,

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Speaker 1: with the low global rates and the force rush to

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Speaker 1: too equities and then to us in passive investing with

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Speaker 1: the millennial group, they're just like, oh yeah, I want

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Speaker 1: I want to be invested in a novel that's going

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Speaker 1: to return, you know, a guarantee twelve percent a year.

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Speaker 1: Whereas the reality behind that is it's not as easy

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Speaker 1: as that, and you know, people are just very open

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Speaker 1: to putting their money into these types of passive products.

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Speaker 1: So you mix that in now with a big transfer

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Speaker 1: of wealth that comes with the actual market buying power. Right.

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Speaker 1: So as a millennial myself, I have friends in the

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Speaker 1: business and in different industries who are now becoming seasoned

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Speaker 1: professional where you know, they're making a fairly good salary

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Speaker 1: and these people are now able to put their money

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Speaker 1: invest in the stock market. Right, So the decision making

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Speaker 1: has now shifted from the boomers to the millennials, right,

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Speaker 1: So the buying out and we're seeing that right because

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Speaker 1: people complain so much about you know, the Robin Hooders

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Speaker 1: and you know or some of the market flow that

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Speaker 1: comes from there, right. But it's not only the Robin Hooders, right,

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Speaker 1: it's the millennials that are a little more open to

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Speaker 1: taking the risks. Myself and my team, we've we went

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Speaker 1: through data on this little phenomenon and you know, some

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Speaker 1: of the market psychology and sentiment of the younger group. Right.

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Speaker 1: So with that taking place, right, all those things mixing

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Speaker 1: into one, right, you have this added volatility right where

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Speaker 1: you should and you could definitely have these left tail

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Speaker 1: events take place more frequently than you were seeing, you know,

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Speaker 1: in the nineties or the eighties. So you know, you

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Speaker 1: mentioned having been on the on the cell side on

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Speaker 1: the desk at BMO, and of course, um, you know

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Speaker 1: again talking about our conversation with Ben a few weeks ago.

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Speaker 1: Would you learn from that experience that you've taken over

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Speaker 1: to the buy side, and how does that in sort

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Speaker 1: of like, what did that experience teach you in terms

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Speaker 1: of the opportunities that arise due to the positioning of

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Speaker 1: the cell side of the dealers and so forth, how

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Speaker 1: does that help you think about in spot opportunities. I

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Speaker 1: was actually speaking to UH. I was actually at my

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Speaker 1: old university and I was speaking UH two weeks ago,

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Speaker 1: and I was speaking to a younger kid, and he

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Speaker 1: was telling me that he trades options. So I'm just

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Speaker 1: asking him, you know some basic questions. You know, okay,

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Speaker 1: how do you expression you? And you know what is

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Speaker 1: it that you look for? Right? So this gentleman had

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Speaker 1: no idea what delta vega gamma was, which was okay, Right,

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Speaker 1: he's a college student who go through what we all learned.

387
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Speaker 1: But the appetite and the willingness to go and trade

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Speaker 1: derivatives is at the highest it's ever been. Right. Everybody

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Speaker 1: wants a point of leverage. Everybody wants to be invested

390
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Speaker 1: in something that could generate something with a convex the component. Right,

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Speaker 1: So people are very fixated on obserus trating even though

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Speaker 1: they have no idea what they're doing. So the growth

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Speaker 1: is tremendous, right. And now you add in the fact

394
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Speaker 1: that dealers need to carry a matchbook, which means that

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Speaker 1: they really just need to heade off their risks, and

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Speaker 1: you add that in and that leads to excessive dealer

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Speaker 1: gamma heaging, right, and that leads to more emphatic swings

398
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Speaker 1: in the market. And you know, you asked me what

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Speaker 1: did I learn at BMO, You know, I learned a

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Speaker 1: tremendous amount under those guys. UM truly grateful to have

401
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Speaker 1: experienced the or had the opportunity to help manage a

402
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Speaker 1: book of that size and go through the day to

403
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Speaker 1: day and understand the movie components of all the complexities

404
00:24:51,800 --> 00:24:54,840
Speaker 1: and a book of that size with those type of products, right,

405
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Speaker 1: because you have a million moving pieces. So I think

406
00:24:58,080 --> 00:25:01,439
Speaker 1: understanding how to manage risk from a large book like

407
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Speaker 1: that with all the moving pieces, I think really translated

408
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Speaker 1: well to how we look at risk here at Ambers.

409
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Speaker 1: But one thing that really opened my eyes was a

410
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Speaker 1: situation that took place and I wanted to stay late

411
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Speaker 1: February or launch, but it was really an eye opener

412
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Speaker 1: to me that the book moves in a particular way

413
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Speaker 1: that we didn't anticipate, right, And although obviously you know,

414
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Speaker 1: I understood and knew the intricacies of the other gamma hedging, right,

415
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Speaker 1: and obviously on a day to day base, I went

416
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Speaker 1: through that process right when we hedged off our books,

417
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Speaker 1: you know, at the beginning of the morning or or

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Speaker 1: the end of the night, because that was our job.

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Speaker 1: One of the exactly success the job was just use

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Speaker 1: money for the bank, right, So you're you're basically there

421
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Speaker 1: as the protection trader. So I remember the market was

422
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Speaker 1: taking and we've got the call from the heads up

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Speaker 1: and my boss at the time literally just I sat

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Speaker 1: um one row away from him, remember him just saying like, Okay,

425
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Speaker 1: we need to hedge everything. And I'm looking at the

426
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Speaker 1: positions I'm looking at like our Vegas moving, our Gamas movies,

427
00:26:12,119 --> 00:26:14,240
Speaker 1: and I'm saying to myself like, man, I don't know

428
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Speaker 1: if this is really the right move. But he just said,

429
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Speaker 1: he's like, we need to hedge everything. We got the

430
00:26:20,359 --> 00:26:23,120
Speaker 1: call up like it does not matter what the prices,

431
00:26:23,640 --> 00:26:26,480
Speaker 1: we have to hedge it. Right. So what that meant

432
00:26:26,480 --> 00:26:29,800
Speaker 1: for us is that we now had to go out

433
00:26:30,000 --> 00:26:36,960
Speaker 1: into the open market and sell sps teachers and basically

434
00:26:37,119 --> 00:26:42,000
Speaker 1: I s so synthetically, what does that do? Right? That

435
00:26:42,400 --> 00:26:44,600
Speaker 1: drives the price of the market down, and that drives

436
00:26:44,640 --> 00:26:48,040
Speaker 1: the price of FIXEL during that time. You know, it

437
00:26:48,160 --> 00:26:51,000
Speaker 1: was an eye opener because US as a large bank,

438
00:26:51,040 --> 00:26:54,000
Speaker 1: you know, we had to basically come in with a

439
00:26:54,080 --> 00:26:57,800
Speaker 1: ton of side and do this when the market was

440
00:26:57,840 --> 00:27:01,560
Speaker 1: already getting hammered. And I see us of myself, this

441
00:27:01,840 --> 00:27:05,560
Speaker 1: is taking place across the streets, and it really sank

442
00:27:05,600 --> 00:27:10,760
Speaker 1: into me that this is much more severe than people

443
00:27:11,000 --> 00:27:17,520
Speaker 1: give give it credit. Because obviously I understood the ramifications

444
00:27:17,560 --> 00:27:19,840
Speaker 1: of this, because you know, I praised on the buy

445
00:27:19,880 --> 00:27:22,880
Speaker 1: side before there, and you know, I I understand how

446
00:27:23,040 --> 00:27:26,119
Speaker 1: market microstruction works. But when you see it in real

447
00:27:26,200 --> 00:27:29,800
Speaker 1: time and you see how you're moving the market with

448
00:27:29,840 --> 00:27:32,160
Speaker 1: so much side and it's other guys that are doing

449
00:27:32,200 --> 00:27:34,200
Speaker 1: the exact same thing, and if you have force liquidations

450
00:27:34,200 --> 00:27:37,119
Speaker 1: things in place, it kind of really just clicks to

451
00:27:37,119 --> 00:27:39,040
Speaker 1: you and you're like, oh my gosh, like that was

452
00:27:39,119 --> 00:27:41,240
Speaker 1: literally just we just dropped the market, or you know,

453
00:27:41,760 --> 00:27:43,439
Speaker 1: us and you know two of the clients really just

454
00:27:43,720 --> 00:27:48,520
Speaker 1: move the market. It emphasizes on what we try to

455
00:27:48,600 --> 00:27:54,280
Speaker 1: do at Amber right. We are fixated on capturing those

456
00:27:54,640 --> 00:27:58,480
Speaker 1: left and right tail events. Right. So we believe that

457
00:27:58,680 --> 00:28:02,600
Speaker 1: with excessive all totally suppression, and we will continue to

458
00:28:02,600 --> 00:28:05,119
Speaker 1: see this right, the market will get back into a

459
00:28:05,160 --> 00:28:08,639
Speaker 1: point of complacency and we will have those short volatility

460
00:28:08,680 --> 00:28:11,800
Speaker 1: funds come back, and we'll have guys that are Chris

461
00:28:11,840 --> 00:28:14,760
Speaker 1: truth selling you know, variants left and right right. So

462
00:28:15,680 --> 00:28:19,919
Speaker 1: it's just about wasting for for the for the complacency,

463
00:28:19,960 --> 00:28:22,840
Speaker 1: the setting right, because when March of points point took place,

464
00:28:23,520 --> 00:28:26,879
Speaker 1: everybody has that fresh in their minds, right, So everybody's

465
00:28:26,920 --> 00:28:29,000
Speaker 1: now they want to manage risk right now. They want

466
00:28:29,000 --> 00:28:31,520
Speaker 1: to focus on on on heading off the book right.

467
00:28:31,520 --> 00:28:33,240
Speaker 1: But there will come a point time where the market

468
00:28:33,240 --> 00:28:34,880
Speaker 1: is just going up and people are gonna be like, oh,

469
00:28:34,960 --> 00:28:36,639
Speaker 1: you know I don't tape the hedge. I don't need to.

470
00:28:36,840 --> 00:28:39,000
Speaker 1: Why do this? You know it's taking away three percent

471
00:28:39,120 --> 00:28:40,560
Speaker 1: deals for me for a year. You know, I don't

472
00:28:40,560 --> 00:28:43,800
Speaker 1: need this anymore. That's when we will have more of

473
00:28:43,840 --> 00:28:47,280
Speaker 1: these emphasized moves takes place where you see a move

474
00:28:47,400 --> 00:28:49,400
Speaker 1: like that, you know you have a right tail event

475
00:28:49,520 --> 00:28:52,840
Speaker 1: or a left till event. And we believe that the

476
00:28:52,920 --> 00:28:55,640
Speaker 1: way how we are set our positioning, we're going to

477
00:28:55,720 --> 00:28:59,320
Speaker 1: be able to capture those type of moves because as

478
00:28:59,360 --> 00:29:02,360
Speaker 1: the market mark streuss things with that, we believe that

479
00:29:02,400 --> 00:29:05,200
Speaker 1: these moves will happen much more frequently than people are

480
00:29:05,240 --> 00:29:23,520
Speaker 1: giving freedance. So this is something I wanted to ask

481
00:29:23,560 --> 00:29:25,640
Speaker 1: about actually, when you were telling the story about how

482
00:29:25,720 --> 00:29:28,480
Speaker 1: everyone on the street was kind of doing the same

483
00:29:28,520 --> 00:29:33,560
Speaker 1: thing all at once and hedging their own volatility exposure

484
00:29:33,600 --> 00:29:37,120
Speaker 1: in similar ways, what are your options when you're doing

485
00:29:37,200 --> 00:29:40,800
Speaker 1: that kind of hedging. Is there an opportunity to do

486
00:29:41,000 --> 00:29:45,600
Speaker 1: something different to what everyone else is doing, or by

487
00:29:45,640 --> 00:29:49,120
Speaker 1: the nature of the exposure, you're sort of forced to,

488
00:29:49,440 --> 00:29:52,959
Speaker 1: you know, buy or sell spy futures or vixed futures

489
00:29:53,040 --> 00:29:56,200
Speaker 1: or something like that. How much freedom freedom is in

490
00:29:56,240 --> 00:29:59,360
Speaker 1: the right word. How much creativity do you have in

491
00:29:59,560 --> 00:30:04,320
Speaker 1: manage in those hedges. Well, you know, you could try

492
00:30:04,320 --> 00:30:06,680
Speaker 1: to get a little bit cute and creative, but at

493
00:30:06,680 --> 00:30:08,239
Speaker 1: the end of the day, it's going to lead to

494
00:30:08,520 --> 00:30:12,480
Speaker 1: one thing. Right, If you are long, you need to

495
00:30:12,520 --> 00:30:14,240
Speaker 1: cut down that dector, right, So at the end of

496
00:30:14,240 --> 00:30:16,400
Speaker 1: the day you're gonna need to be negative delta. So

497
00:30:16,720 --> 00:30:18,880
Speaker 1: no matter how you want to flip it, if you

498
00:30:19,440 --> 00:30:22,000
Speaker 1: want to say, Okay, you know, I'm gonna try to

499
00:30:22,760 --> 00:30:26,720
Speaker 1: sell something that I believe is relatively cheaper that carries

500
00:30:27,120 --> 00:30:30,880
Speaker 1: heavier beta. Sure, but at the end of the day,

501
00:30:31,240 --> 00:30:34,640
Speaker 1: whether you're trying to go through the window or go

502
00:30:34,760 --> 00:30:36,640
Speaker 1: through the front door or the back door, you gotta

503
00:30:36,640 --> 00:30:39,520
Speaker 1: get out of the house, all right. So it's literally

504
00:30:39,600 --> 00:30:41,640
Speaker 1: the the exact same thing. If if you want to

505
00:30:41,680 --> 00:30:43,880
Speaker 1: express it and jump through the attic, you can do that,

506
00:30:44,320 --> 00:30:46,840
Speaker 1: but at the end of the day, you're not gonna

507
00:30:46,960 --> 00:30:49,880
Speaker 1: be able to escape the situation measure, and then then

508
00:30:49,920 --> 00:30:52,160
Speaker 1: that's basically Okay, I'm at a point where I need

509
00:30:52,200 --> 00:30:55,440
Speaker 1: to minimize your all right. So I heard a m

510
00:30:56,200 --> 00:30:58,880
Speaker 1: I think it was actually Chris Cole. Chris Cole said

511
00:30:58,960 --> 00:31:01,880
Speaker 1: this when I podcast, and he was basically saying, like

512
00:31:02,440 --> 00:31:05,640
Speaker 1: when the market was tanking, we had our our phones

513
00:31:05,760 --> 00:31:08,520
Speaker 1: ringing off the hook, and you know, everybody wanted to

514
00:31:08,520 --> 00:31:10,560
Speaker 1: to hide a point, but you're bid crent like, look,

515
00:31:10,920 --> 00:31:12,960
Speaker 1: there's nothing I can do for you at this point,

516
00:31:13,320 --> 00:31:15,960
Speaker 1: Like you you want you want to try to hide

517
00:31:16,040 --> 00:31:20,320
Speaker 1: up your book now when the market takes you down,

518
00:31:20,320 --> 00:31:23,000
Speaker 1: like the time to head was beforehand, right, you should

519
00:31:23,000 --> 00:31:26,400
Speaker 1: have been calling those guys beforehand. So the game of

520
00:31:26,480 --> 00:31:29,920
Speaker 1: volatility is a psychological game, right because people look at

521
00:31:29,960 --> 00:31:32,560
Speaker 1: this and they say, you know, I don't really need

522
00:31:32,560 --> 00:31:34,760
Speaker 1: this right now? Why am I gonna lose flod percent

523
00:31:34,840 --> 00:31:37,680
Speaker 1: off my portfolio paying for this? You know, like things

524
00:31:37,680 --> 00:31:39,960
Speaker 1: are fine, right, but those are the moments where you

525
00:31:39,960 --> 00:31:43,720
Speaker 1: really need it, because yeah, you may lose five percent

526
00:31:44,480 --> 00:31:47,920
Speaker 1: and your books paying for volatility, but it's going to

527
00:31:48,040 --> 00:31:51,320
Speaker 1: off set those losses where you're gonna lose thirty five

528
00:31:53,040 --> 00:31:57,200
Speaker 1: And in some situations, guys, if you were positioned well

529
00:31:57,320 --> 00:31:59,880
Speaker 1: enough like we did. You know, we did um ah

530
00:32:00,000 --> 00:32:03,320
Speaker 1: our tests to see where our positioning would be in

531
00:32:03,800 --> 00:32:06,240
Speaker 1: and watch, and it was very easy to see that

532
00:32:06,880 --> 00:32:09,720
Speaker 1: with a small allocation, not only would you have recoup

533
00:32:09,800 --> 00:32:12,240
Speaker 1: your losses on and based on the allocation that we

534
00:32:12,280 --> 00:32:14,160
Speaker 1: believe and I won't go into it, you know, discussing

535
00:32:14,200 --> 00:32:17,000
Speaker 1: that on the podcast, but you would have not only

536
00:32:17,000 --> 00:32:19,680
Speaker 1: recoup your losses, but you would have made money. So

537
00:32:20,440 --> 00:32:23,520
Speaker 1: you know, obviously contingent on the allocation side and whatnot,

538
00:32:23,560 --> 00:32:26,760
Speaker 1: but there is a situation where this thing is not

539
00:32:26,840 --> 00:32:29,760
Speaker 1: only served as a perspective base, but it could also

540
00:32:30,080 --> 00:32:32,120
Speaker 1: make money for you. And you know, even if you

541
00:32:32,160 --> 00:32:35,920
Speaker 1: were just a blind guy that just decided blinding volatility

542
00:32:36,440 --> 00:32:40,000
Speaker 1: pre February March, you made money. If you were long volatility,

543
00:32:40,040 --> 00:32:42,120
Speaker 1: it was very difficult for you not to make money.

544
00:32:42,400 --> 00:32:46,400
Speaker 1: It's hard to try to express that view and try

545
00:32:46,400 --> 00:32:48,120
Speaker 1: to get cute and creative about it, because at the

546
00:32:48,200 --> 00:32:50,959
Speaker 1: end of the day, your your focus is basically on

547
00:32:50,960 --> 00:32:54,640
Speaker 1: one thing, and that's really just to mitigate list. I

548
00:32:54,720 --> 00:32:56,760
Speaker 1: want to go back to the question that I asked

549
00:32:57,040 --> 00:32:58,880
Speaker 1: right at the beginning, which is why do all curve

550
00:32:59,000 --> 00:33:01,880
Speaker 1: slope upboards? And I mean, I understand that that's how

551
00:33:01,880 --> 00:33:03,800
Speaker 1: it always is, but you know, it seems to me

552
00:33:04,600 --> 00:33:07,280
Speaker 1: that if you wanted to ask, like, oh, what's the

553
00:33:07,280 --> 00:33:09,800
Speaker 1: stock market going to do over the next week or

554
00:33:09,840 --> 00:33:12,680
Speaker 1: the next month, for the next two years, the next

555
00:33:12,680 --> 00:33:15,880
Speaker 1: five years, um, it's probably gonna go up based on

556
00:33:16,200 --> 00:33:18,720
Speaker 1: I'm not talking about the future, but I mean, historically speaking,

557
00:33:18,760 --> 00:33:21,160
Speaker 1: that was just the case that over the long term,

558
00:33:21,200 --> 00:33:24,080
Speaker 1: and this is like a fundamental axiom of investing, just

559
00:33:24,280 --> 00:33:26,520
Speaker 1: like over the long term, hold for the long term

560
00:33:26,520 --> 00:33:29,720
Speaker 1: stocks usually go up, etcetera. And so if this is

561
00:33:29,760 --> 00:33:32,880
Speaker 1: one of the fundamental ideas in investing that the short

562
00:33:33,000 --> 00:33:35,600
Speaker 1: term is noise and the long term is a steady gain,

563
00:33:36,000 --> 00:33:39,440
Speaker 1: which is what most asset managers sort of assume. Why

564
00:33:39,680 --> 00:33:42,360
Speaker 1: do people pay more for protection over the long term

565
00:33:42,680 --> 00:33:47,440
Speaker 1: than the short term. Yeah, that's a really good philosophical question.

566
00:33:47,560 --> 00:33:50,840
Speaker 1: I think it's because we don't have and we can't

567
00:33:50,920 --> 00:33:55,960
Speaker 1: really project an idea of how detrimental the ramistications will be. Right,

568
00:33:56,160 --> 00:33:59,320
Speaker 1: And it's one of those situations where when the AD

569
00:33:59,440 --> 00:34:04,280
Speaker 1: launched to take place, most likely it's the beginning of

570
00:34:04,280 --> 00:34:06,880
Speaker 1: what will be a bigger ball, right, So it's like

571
00:34:07,040 --> 00:34:10,319
Speaker 1: that snowball effect, and it's very hard to try to

572
00:34:10,400 --> 00:34:12,520
Speaker 1: price that out. You know, if we were in a

573
00:34:12,600 --> 00:34:17,080
Speaker 1: situation where guys could buy cheap ball on forward projections,

574
00:34:17,960 --> 00:34:21,040
Speaker 1: I think, from philostrophical standpoint, guys to do it. But

575
00:34:21,120 --> 00:34:23,800
Speaker 1: you know, I think people who don't really trade ball atility.

576
00:34:24,600 --> 00:34:28,640
Speaker 1: I didn't know that when the market tanked in February March,

577
00:34:29,520 --> 00:34:32,360
Speaker 1: the longer dated stuff on the term structure didn't really

578
00:34:32,360 --> 00:34:34,440
Speaker 1: move too much, right if you look at some of

579
00:34:34,480 --> 00:34:36,600
Speaker 1: the I mean, if you want to just talk about

580
00:34:36,600 --> 00:34:40,200
Speaker 1: like an exotic note, um, well let's just say in jail,

581
00:34:40,280 --> 00:34:43,800
Speaker 1: like two years out the vall on that didn't really

582
00:34:43,840 --> 00:34:47,960
Speaker 1: move as much as people anticipate, right, But the longer dated,

583
00:34:48,280 --> 00:34:50,120
Speaker 1: the real longer dated ball stuff like you know, you

584
00:34:50,160 --> 00:34:53,319
Speaker 1: don't know five years, three years the year, that type

585
00:34:53,360 --> 00:34:56,040
Speaker 1: of stuff doesn't really get going when fall is uh

586
00:34:56,800 --> 00:34:59,719
Speaker 1: something like that. You know, So there is that miscon

587
00:34:59,719 --> 00:35:02,719
Speaker 1: stuff and that people have where you know, they think like, well,

588
00:35:03,000 --> 00:35:05,920
Speaker 1: you know, five years, five years of old or whatever,

589
00:35:05,920 --> 00:35:08,120
Speaker 1: it's probably slight. So you know, I'm just gonna sell it. Well,

590
00:35:09,120 --> 00:35:11,520
Speaker 1: it's not easy. I think everybody would just set up

591
00:35:11,600 --> 00:35:16,040
Speaker 1: is you just do that? But yeah, from philostophical standpoint,

592
00:35:16,719 --> 00:35:19,520
Speaker 1: I could see why, uh, or projecting its tough, right,

593
00:35:19,560 --> 00:35:21,799
Speaker 1: And I mean you to think about all the bright

594
00:35:21,880 --> 00:35:25,160
Speaker 1: hands in the market, right, we have so many intelligent guys,

595
00:35:25,200 --> 00:35:30,080
Speaker 1: and nobody can per project volatility. There's a big assumption

596
00:35:30,120 --> 00:35:32,680
Speaker 1: factor and there's a lot of variance and a ton

597
00:35:32,719 --> 00:35:36,239
Speaker 1: of variability and in those types of assumptions and that

598
00:35:36,320 --> 00:35:39,360
Speaker 1: type of modeling. So with all the bright minds that

599
00:35:39,440 --> 00:35:43,560
Speaker 1: this world has produced, nobody has been able to accurately

600
00:35:44,320 --> 00:35:47,680
Speaker 1: forecast volatility. You could have maybe a sense, and you

601
00:35:47,719 --> 00:35:50,320
Speaker 1: know you could, you could make it one or two times,

602
00:35:50,480 --> 00:35:55,799
Speaker 1: but actively forecasting volatility is something that I just don't

603
00:35:55,800 --> 00:36:01,920
Speaker 1: think that humans can do right now. Well, Chris, that

604
00:36:02,000 --> 00:36:05,520
Speaker 1: was a really engaging discussion, and it's always good to

605
00:36:05,560 --> 00:36:09,000
Speaker 1: dive into the volatility space, especially now when we have

606
00:36:09,120 --> 00:36:11,759
Speaker 1: interesting things going on ahead of the election. And I

607
00:36:11,800 --> 00:36:14,120
Speaker 1: guess the good news is we won't have to wait

608
00:36:14,719 --> 00:36:17,799
Speaker 1: that long to see how it all shakes out, so

609
00:36:18,000 --> 00:36:21,400
Speaker 1: just until November December, I guess. Thanks so much for

610
00:36:21,440 --> 00:36:25,080
Speaker 1: coming on. Thanks Chris, that was great. Thank you guys,

611
00:36:40,760 --> 00:36:43,560
Speaker 1: So Joe. I always enjoy it when we talk about

612
00:36:43,680 --> 00:36:46,279
Speaker 1: the volatility trading space, and it's good to get a

613
00:36:46,440 --> 00:36:49,680
Speaker 1: sort of market practitioner like Chris who's in the weeds

614
00:36:49,680 --> 00:36:53,040
Speaker 1: and can really explain what's going on when we see

615
00:36:53,280 --> 00:36:57,399
Speaker 1: a gamma hedging event in markets. Yeah, there's so many

616
00:36:57,440 --> 00:37:02,279
Speaker 1: interesting things to think about. I mean, one is, you know,

617
00:37:02,719 --> 00:37:06,959
Speaker 1: against thinking talking to Chris trying to bend think about

618
00:37:06,960 --> 00:37:10,480
Speaker 1: all these retail traders who have come in to the

619
00:37:10,560 --> 00:37:13,719
Speaker 1: market either and in multiple ways, I mean, some of

620
00:37:13,800 --> 00:37:16,800
Speaker 1: course going crazy with call buying. Also, I thought it

621
00:37:16,840 --> 00:37:19,160
Speaker 1: was interesting Chris mentioning the rise of like this sort

622
00:37:19,200 --> 00:37:22,320
Speaker 1: of like passive like I'm just getting, you know, by

623
00:37:22,440 --> 00:37:24,759
Speaker 1: the same amount of stock every week on an app

624
00:37:24,840 --> 00:37:28,080
Speaker 1: like acorn or whatever. How much of the opportunity sort

625
00:37:28,120 --> 00:37:31,680
Speaker 1: of comes down to like market structure things as opposed

626
00:37:31,719 --> 00:37:35,800
Speaker 1: to taking some directional view like oh, I think Biden

627
00:37:35,960 --> 00:37:39,920
Speaker 1: is going to win and therefore X. Yeah. Absolutely, And

628
00:37:40,040 --> 00:37:42,840
Speaker 1: I guess the big change that we've seen in the

629
00:37:42,880 --> 00:37:45,640
Speaker 1: market in recent years is that volatility trading has sort

630
00:37:45,680 --> 00:37:50,800
Speaker 1: of exploded into its own industry, and with it that's

631
00:37:50,840 --> 00:37:53,920
Speaker 1: had had the impact on dealers, and then what the

632
00:37:53,920 --> 00:37:56,560
Speaker 1: dealers are doing is having an impact on the broader market,

633
00:37:56,680 --> 00:38:00,600
Speaker 1: but also volatility expectations as well, So it turns into

634
00:38:00,680 --> 00:38:05,040
Speaker 1: this sort of um, self fulfilling isn't the right word,

635
00:38:05,040 --> 00:38:09,879
Speaker 1: but I guess self fueling cycle of volatility trading, so

636
00:38:10,000 --> 00:38:15,839
Speaker 1: like suppression begets further suppression. Basically, yes, And you know, look,

637
00:38:15,880 --> 00:38:18,759
Speaker 1: I still don't feel like I understand why volatility curve

638
00:38:18,800 --> 00:38:23,680
Speaker 1: slope upward. It doesn't make any sense to me. The

639
00:38:23,719 --> 00:38:25,759
Speaker 1: short term is weird and we don't know what's going

640
00:38:25,800 --> 00:38:28,680
Speaker 1: to happen tomorrow, but probably the long term will be

641
00:38:28,800 --> 00:38:33,120
Speaker 1: kind of boring, right. I also know, I feel like

642
00:38:33,160 --> 00:38:36,040
Speaker 1: the long term, I mean, look, I think has kind

643
00:38:36,040 --> 00:38:38,759
Speaker 1: of jaded me about what can happen in a single year.

644
00:38:38,880 --> 00:38:42,040
Speaker 1: Let alone over the course of a decade, but any

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00:38:42,239 --> 00:38:45,880
Speaker 1: tomorrow could be very weird. We know that, what about

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00:38:46,320 --> 00:38:50,200
Speaker 1: ten years from tomorrow, Well, ten years from tomorrow, every

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00:38:50,200 --> 00:38:52,600
Speaker 1: single advisor we would ever talk about say, yeah, stocks

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00:38:52,600 --> 00:38:54,560
Speaker 1: will probably be hard. Yeah, but you don't know what

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00:38:55,000 --> 00:38:56,960
Speaker 1: it's like, Like this is like but you don't know

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00:38:57,000 --> 00:39:01,680
Speaker 1: what happens in the meantime. Who cares? And I guess

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00:39:02,880 --> 00:39:05,120
Speaker 1: I'm still like on the hunt for like a totally

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00:39:05,160 --> 00:39:08,759
Speaker 1: satisfying answer about how the investment industry's view could be

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00:39:09,360 --> 00:39:12,400
Speaker 1: docs generally go up, ignore the short term noise. But

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00:39:12,480 --> 00:39:14,480
Speaker 1: also we're going to pay more for long term hedges

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00:39:14,520 --> 00:39:16,919
Speaker 1: than we do short term mages. Okay, look, I think

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00:39:17,120 --> 00:39:20,960
Speaker 1: the moral of this conversation, or the big takeaway is

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00:39:21,040 --> 00:39:24,080
Speaker 1: that you're going to be selling some very very cheap

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00:39:24,280 --> 00:39:27,880
Speaker 1: volatility exposure ten years in the future. Everyone should come

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00:39:27,920 --> 00:39:30,680
Speaker 1: to you for their long term hedging needs. Yeah, I'm

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00:39:30,880 --> 00:39:33,440
Speaker 1: I'm putting a call out right now. No, I'm not,

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00:39:33,520 --> 00:39:35,560
Speaker 1: but I guess, you know, thinking about it that way,

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00:39:35,560 --> 00:39:37,960
Speaker 1: it's like, sure, I can say that that I'll like

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00:39:38,200 --> 00:39:40,040
Speaker 1: would be a seller of long term vall, but do

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00:39:40,080 --> 00:39:41,480
Speaker 1: I really want to be on the hook for it?

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00:39:41,760 --> 00:39:44,080
Speaker 1: Maybe that's the issue. I just don't want to. I

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00:39:44,120 --> 00:39:45,800
Speaker 1: just don't want to take it on my book. Yeah.

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00:39:45,840 --> 00:39:47,640
Speaker 1: I think it's going to end up being something like

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00:39:47,680 --> 00:39:52,400
Speaker 1: the carrying cost over that course of time, isn't it. Okay? Well,

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00:39:52,960 --> 00:39:57,839
Speaker 1: on that note again, everyone buy vall exposure from Joe

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00:39:58,000 --> 00:40:01,160
Speaker 1: he's offering. But in the means time. This has been

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Speaker 1: another episode of the All Thoughts Podcast. I'm Tracy Alloway.

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Speaker 1: You can follow me on Twitter at Tracy Alloway. And

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00:40:08,040 --> 00:40:10,879
Speaker 1: I'm Joe Wisenthal. You can follow me on Twitter at

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00:40:10,880 --> 00:40:14,359
Speaker 1: the Stalwork. Follow our guest on Twitter, Chris Steel. He's

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00:40:14,440 --> 00:40:19,240
Speaker 1: at he S I D I I I So Pasted

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00:40:19,360 --> 00:40:23,680
Speaker 1: with three Eyes. Follow our producer Laura Carlson at Laura M. Carlson.

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00:40:24,000 --> 00:40:28,000
Speaker 1: Follow the Bloomberg head of podcast, Francesco Levie at Francesco Today,

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00:40:28,400 --> 00:40:31,120
Speaker 1: and check out all of our podcasts at Bloomberg under

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00:40:31,160 --> 00:41:02,759
Speaker 1: the handle at podcast. Thanks for listening to