Vol markets value the US election as a massive binary risk event that occurs at one point-in-time (like earnings in a stock)

The real risk is a contested election and US constitutional crisis that occurs throughout time

If the latter comes to pass, forward vol is very mispriced

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More from @vol_christopher

4 Jun
Structural Causes of Social Revolutions (Goldstone):
1) Demographics, older people don't riot
2) Wide Income Disparity
3) Discrimination, racially, religiously, economically
4) Shifts in international relations
5) Corrupt demagogue/personalist regime
What is rather dangerous is that the US embodies many of these attributes, which starts with the widest income disparity in the US history

The key differentiator is that our demographics are older at an average age of ~39.
US demographics are deceiving. A barbell.

Boomers (23%; 56-74yrs ) are wealthy + support policies for stability and bail-out asset markets. Millennials (26%; 24-39 yrs), the first generation worse off economically than their parents likely support radical change (Artemis 2020)
Read 5 tweets
5 Mar
@billvb_py @MikeOfGaia I do not recommend trading instruments like VXX without detailed knowledge of VIX futures and options markets. The retail investor faces difficult choices on long vol without an ability to invest in hedge funds
@billvb_py @MikeOfGaia For those so inclined, one option is to learn the basics of option theory (see McMillian for a good intro) and execute simple rules-based rolling put and call strategies as a hedge to equity exposure (perhaps with UST bonds or TIPs as collateral).
@billvb_py @MikeOfGaia The only solid ETF long vol product I trust is Nancy Davis's IVOL product, but this buys rate vol, not equity, and is largely a hedge against inflationary spikes.
Read 4 tweets

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