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Started By
Message
Posted on 2/7/18 at 6:37 pm to LSUtoOmaha
Could someone explain this to me (a person who has no financial background)?
Like what was he actually doing?
Like what was he actually doing?
This post was edited on 2/7/18 at 6:38 pm
Posted on 2/7/18 at 8:16 pm to BearsFan
In the financial markets there is something called volatility. Volatility is by definition the number of standard deviations from a mean. Basically it is tracking how much the stock market is moving around. Generally the stock market volatility in the past few years has been really low. We have not had many days for example where the market went down more than a percentage or two. So people basically bet for the near future that the volatility will remain low, and they roll those winnings over. Well eventually, like on Monday, the market goes into a relative tailspin and the rate of volatility doubled, and boom just like that, the entire fund betting against volatility is wiped out. The reason they are screwed is because they are compounding winnings and betting into how volatile markets WILL be. That is why I stated earlier than I am annoyed. It took reckless behavior to get wiped out.
This post was edited on 2/7/18 at 8:20 pm
Posted on 2/7/18 at 8:59 pm to BearsFan
He basically bet 4 million there wouldn’t be an earthquake. An then a 7 on the Richter scale rocked his world.
Posted on 2/8/18 at 3:11 pm to southernelite
Thanks for explaining that. Did he bet everything he had?
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