Equity derivatives volumes are surging to daily records as traders scramble to take advantage of or hedge themselves against market turmoil and the resulting spike in volatility, reports the FT. [...]Growing demand for protection against volatility has fuelled the use of more sophisticated OTC products, including dividend swaps, where investors can lock in a dividend price, and variance swaps, which isolate volatility and take away other attributes that are ordinarily factored in, such as interest rates, dividends and movements in the price of the underlying asset. Finally, everybody hedged ? Can we move on now ?
Actually no because if everybody is "hedged", there's no sense of urgency to do anything. We'll see if the VIX can implode the next few days back into the teens.