Spotlight on Volatility Trading

Written By Simon O'Shea

Dan Ferris and Corey McLaughlin from Stansberry Research talk with Jim Carroll, Senior Wealth Advisor and Portfolio Manager at Ballast Rock Private Wealth about trading volatility:

  • Jim discusses how he found his way to volatility trading with CBOE Volatility Index ("VIX") futures, breaking down what caused "Volmageddon" in February 2018 and what he learned from the experience, including which specific factors drive the VIX.

  • He also discusses his "VIX Mix" composite of 17 different indicators that he uses as a market indicator, which applies to both upward and downward moves. Though primarily for trading, Jim explains that the VIX Mix can help more accurately gauge market sentiment and enable long-term investors to position themselves for market moves.

  • Jim He reminds listeners to beware of embedded leverage and to size their positions carefully and also talks about some of the shortcomings of volatility data, including small sample sizes, the fact that volatility tends to cluster, and the outsized impact that institutional investors can have.

  • Finally, Jim gives his thoughts on VIX futures products including the popular Simplify Volatility Premium Fund (SVOL).

Simon O'Shea
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