A Volatility Expansion for the Record Book

Today the Cboe Implied Volatility Index (VIX) shot up 180% at the open, one of the sharpest vol expansions we've seen. 

The VIX reached 65, the highest level since the March 2020 Covid Crash. 

The VIX is a measure of the expected future volatility implied by option prices. 

It means the option market is expecting stock prices to spread out more, which means more ups and downs. 

Options and futures on the VIX Index are a good example of an asymmetric hedge. 

An asymmetric hedge structures an investment hedge to offset risk in other holdings with an asymmetric payoff such that the potential profit from the hedge is materially greater than the amount of risk taken to achieve it.

Asymmetric hedging is when we lose a predefined amount if the protective hedge for risk management isn’t needed because the price trend continues, but the position explodes with profit when the underlying trends.

Mike Shell is the founder, president, and chief investment officer of Shell Capital Management, LLC, and the portfolio manager of Asymmetry® Managed Portfolios.  Shell Capital Management, LLC, is a registered investment advisor focused on asymmetric risk-reward and absolute return strategies. Shell Capital provides investment advice and portfolio management to clients with separate accounts at Goldman Sachs Advisor Solutions with an investment management agreement. The observations shared on this website are for general information only and should not be construed as investment advice to buy or sell any security. This information does not suggest in any way that any graph, chart, or formula offered can solely guide an investor as to which securities to buy or sell, or when to buy or sell them. Securities reflected are not intended to represent any client holdings or recommendations made by the firm. In the event any past specific recommendations are referred to inadvertently, a list of all recommendations made by the company within at least the prior one-year period may be furnished upon request. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities on the list. Any opinions expressed may change as subsequent conditions change. Please do not make any investment decisions based on such information, as it is not individualized advice and is subject to change without notice. Investing involves risk, including the potential loss of principal, which an investor must be willing to bear. Past performance is no guarantee of future results. All information and data are deemed reliable but are not guaranteed and should be independently verified. The presence of this website on the Internet shall in no direct or indirect way raise the implication that Shell Capital Management, LLC is offering to sell or soliciting to sell advisory services to residents of any state in which the firm is not registered as an investment advisor. If this website contains information regarding options trading, please read the Characteristics & Risks of Standardized Options, also known as the Options Disclosure Document (ODD). Options involve risk and are not suitable for all investors. The views and opinions expressed in Asymmetry® Observations and Asymmetric Investment Returns are those of the authors and do not necessarily reflect the position of Shell Capital Management, LLC. The use of this website is subject to its terms and conditions.