I enjoyed reading this piece by Like Kawa and Yakob Petereil, Bloomberg, on how returns on short vol trades (in equities) is declining… Coming to commodity markets from an analyst/small speculator my bias has always been in favor of buying options… After spending a career working with large companies with commodity price risk, my bias remains unchanged…
“The short-volatility trade, where investors sell options to bet against equity price swings, is becoming less profitable. The strategy has in theory made no money for investors 42% of the time since 2018, according to new research, compared with a recent average of about 30%.”
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