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McElligott Flags Potential For ‘Very Large’ Vol Control Selling
A consistent, reliable buyer of equities could morph into a seller going forward. And it wouldn't take much in the way of fireworks to make it happen.
Over the course of 2023, the steady decline in realized vol created a latent bid from the vol control universe, which added exposure as the daily range of spot outcomes compressed.
Since last year's lows, vol control funds have taken up their exposure by some $160 billion. According to Nomura's Charlie McElligott, their allocation is now in the
While I am sure this is true, think of all the investors who have been under allocated equities because they have been patiently waiting for a pullback. I am one of these investors so I am sure they exist.
True, but the flows from you and your cohorts are dwarfed by the amounts the various algo-driven funds throw around. Three or four times larger at times. They have even come to be substantially larger than share buybacks.
Monthly Op Ex this Friday could unleash vol