I don’t think he is right about this, he doesn’t have more information than others, but he can reasonably argue using his logic.
Derivatives,ex trader at 2 major IB's,who has traded dispersion books.. Your statement about options and futures being cheaper is clearly from a retail perspective.. The trade is supposedly a dispersion trade,which IMHO was poorly explained
I don't get it. This Kramer guy is a bot. They are long SN calls, short index (form of disp). They are also long SN spot to hedge? Hedge what? How much size, inter-mkt could you possible commit to something this stupid? Spooz vols have dropped more than components, absent earnings-crush. This dude should run away. Go off the grid. New identity, wig, beard, etc.
You can trade SPX vol for $0.5 per side. 100 index multiplier. ES vol is going to run at least 1.5 per side. 50 index multiplier. Please check my math, but I think $3/side is worser.
This dude made all of this sht up on the fly. It's not even a trade. Practically, dispersion (done right) is massively constrained as it's hyper-inefficient and really only done on huge books at places like CIG. Large MMer books. He reminds me of the guy in Blackhat (movie) that runs a FCM, "they traded Soy" (said nobody, ever).
I can't believe it. Long dispersion is short index vol/long component vol "street" vol. One of these guys is r*tarded. You buy SN-vol and yeah, you can gamma-trade the vol with spot, as you're locking in excess returns over the SN/index vol-switch(swap) or whatever. The index side is generally passive unless you're reducing bc you're booking SN gamma or reallocating. Once on it's a gamma-trade / vol. You're BUYING shares when you're already long SN calls? Literally nobody would do that. You go from replicating index at edge to a Texas hedge? I could see shorting spot to effect the long straddle on stocks to protect your index puts/flatten delts.