Kris Sidial of The Ambrus Group joins the podcast to discuss tail-risk hedging: how it works, why it’s important, and how investors can still take advantage of volatility mispricings to protect themselves against further downside — at least in stocks.
- What is tail risk hedging? (3:19);
- Traditional hedges haven’t worked, starting with the 60:40 approach. How might investors hedge stock and bond exposure? (6:15);
- There are numerous options for investors to protect against downturns. But it’s not always as easy as buying put contracts on indexes (8:24);
- Variance swaps, one way to compound returns on movements in volatility (10:25);
- Thoughts on UK pensions and what might have caused issues in that segment of the market (15:27);
- What investors are doing in this environment in terms of tail-risk hedging — there are still opportunities to hedge (20:02);
- Background on the guest (30:08);
- Discussion of systemic risk as a result of the layers of options trades and counterparties: “There is a systemic hazard taking place right now in the derivatives market” (39:32);
- Speaking of risk, what about the regulatory environment? Are regulators asleep at the switch? Reasons to believe Dodd-Frank is perhaps not as effective as people think.. (43:37)
- Thoughts on cryptocurrencies (50:01).
More About Kris Sidial
- Website: Ambrus.Capital;
- Twitter: @KSidiii;;
- White paper mentioned in the episode.