One way to profit from interest rate volatility is to get directional calls right, ahead of a large move in rates. Sadly, we have yet to come across anyone who has been able to consistently get these directional calls right.
The large and liquid universe of global interest rate options offers an impressive set of tools from which volatility strategies can be constructed. This article discusses how volatility strategies are reliable risk diversifiers.
It’s our view that there is a paradigm shift currently taking place.
Psychologist Daniel Kahneman Kahneman, together with his late colleague Amos Tversky, explored the many cognitive biases that impair human decision making, particularly in relation to uncertain events, and coined the acronym WYSIATI – What You See Is All There Is.
The expression ‘steady as a rock’ is associated with stability, steadfastness and reliability. The kinds of characteristics that fund managers like to co-opt into their firm names. In financial markets uncertainty is always present; it’s just the degree of it that varies.
Two charts we are watching closely and what they mean to us and investors.