Discussion in 'Trading' started by cole_, Feb 11, 2018.
or prop firms
I'm guessing hedge funds. Because basically for everyone else...it's illegal for them to take risks. Or against their charter or code of conduct.
Only hedge funds take relatively large risks, amongst the key big players.
Hedge funds also have, or potentially have, larger losses as well.
You won't see a retail operation like Bank of America taking a huge, one-way, speculative bet on the VIX.
Unless there's a Rogue Trader in there. -- every trader should watch that 1999 movie...nine times.
But... I would say all of those on that list are not speculators. I think the word 'speculator' isn't really in play in VIX related stuff... maybe the odd retail, who speculates. Who really are speculators... that would be guys like Bill Ackman, I doubt they trade heavily in volatility products.
VIX products are mainly used for hedging and firms like Citadel and Flow mainly trade them in arbitrage....
Should emphasize that number is over four months old.
The large CS holding is not real, as it's just the stock they retained for liquidity...
Most of these have to do with creation/redemption and are likely hedged. No way to know what speculator had a large position in one direction and even those might have been hedges or offsets.
Directional bets were most probably retail as is evident from the discussions.
CS hedged the live stuff... The large bit retained wasn't really live, so it didn't need any hedges.
And yes, my impression is that this is mostly a retail product.
EDIT: correction: this WAS a retail product.
But the large firms on this list:, MS, Citadel, Flow and Sigma all would trade this in arbitrage...
So, designed for retail but most volume is done by professionals
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