Volatility Trading Risk Management

Volatility Trading Risk Management

Volatility Trading Risk Management

The economy in 2011 has more than a few hurdles to climb. We have just put a few years of global market volatility behind us...or have we? What might be the causes and what are some possible fixes? To begin answering that, we will turn to financial offerings.

The stock market has a glut of available products and their derivatives . Here is just a small sampling of what you can acquire:

  • You can buy funds that move up and down 3x the leverage of the underlying assets
  • There are options based on futures based on indexes that are based on stocks
  • You can even buy futures contracts for hurricanes, anticipated snowfall, and frost
  • Algorithmic trading based on complex instructions that execute to the fraction of a second
  • Dark liquidity pools where bids and asks are not posted

Do we really need all these products? While brokers and exchanges are frantic to create new products that will entice every sort of attention-deficit trader, shouldn’t we be asking the bigger question of whether these products are ultimately helping or harming the economy? It appears that each new product encourages faster trading, increased market volatility, and instant gratification.


  • Volatility Trading Risk Management

    Volatility Trading Risk Management

    Volatility Trading Risk Management

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