Description: The biggest sell-off in the Standard & Poor’s 500 Index since March is rewarding options traders who bet on a surge in volatility with gains of 75 percent.
Source: Bloomberg.com
Date: 01/23/2010
Link: http://www.bloomberg.com/apps/news?pid=20601103&sid=aZOPq7yDKhng
Questions for discussion:
- What sort of risk is involved with these instruments?
- Who would be interested in them?
- Do you agree with the comment that “People are betting on higher levels of volatility in the short term.†Explain your answer.
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