Vol shock triggers reassessment in equity derivatives

Software trading fotolia
By Ross Lancaster
11 Mar 2020

Wild swings in equity market volatility have caused a rush to reassess derivatives positions, as the cost of hedging increases and weakness emerges in more exotic products.

“A lot of this is reminiscent of 2008, without getting too doom and gloom,” said one US equity derivatives head on Wednesday. “The underlying conditions are obviously super different, but when volatility snowballs it starts to show weaknesses and residual exposures that can become quite significant.”

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