5 ms·
The questions typically are (1) Can you find an instrument that lets you bet on the mispricing (2) do you have the wherewithal to stay solvent for the arbitrary
by sfifs 9y ago
The questions typically are (1) Can you find an instrument that lets you bet on the mispricing (2) do you have the wherewithal to stay solvent for the arbitrary period of time it takes for the market to correct.
Individual investors typically cannot access the right instruments (typically weirdly structured long term options). Typical institutional money managers cannot because their measurement typically penalizes continuous money loss. Lots of them however may have spotted the opportunity.
- meri_dian 9y agoWhy can't individual investors access them?
- mikeokner 9y agoYou have to find a broker that will sell them to you. Usually these things aren't vanilla options, they're some sort of quasi-option derivative.
- 2trill2spill 9y ago> Usually these things aren't vanilla options, they're some sort of quasi-option derivative. Options are derivatives.
- deleted 9y ago[deleted]
- drglitch 9y agoThey can - just buy an put on the ETF via your favorite neighborhood broker like schwab, etrade, etc. Getting authorized for options trading on your account is pretty straight forward and serves as a last fair warning of how much money you're likely going to lose :) EDIT: to clarify, most of the "exotic" stuff like VIX and XIV (was) are ETFs that are accessible by "regular" investors and hide away the complexities of properly structuring the underlying position to get the exposure to certain aspect of the market. This opaqueness is what makes them so dangerous IMO.
- senthil_rajasek 9y agoSometimes brokerages prevent retail clients like in this story below, https://www.marketwatch.com/story/fidelity-prevents-retail-clients-from-trading-short-volatility-products-2018-02-09 https://www.marketwatch.com/story/fidelity-prevents-retail-c...