Ponzi World (Over 3 Billion NOT Served)

The globalized economy is a colossal Ponzi Scheme in which the vast majority survive on the bread crumbs falling off the table. The possibility of 7 billion people achieving a consumption-oriented lifestyle is zero, so the World Bank conveniently set the poverty line at $1.25/day to legalize global slavery. As long as someone else's children are doing the suffering, it's "all good". Post-2008, this illusion was extended merely by plundering all future generations.

Friday, November 20, 2015

Volatility Feedback Loop

Options Implied Volatility (VIX/VXO/VXV etc.) is imputed from options prices. It measures gambler "demand" for downside insurance protection. Options that are not actively traded are (mis)-priced by Skynet based upon historical volatility, which is usually mean reverting, except now...apparently 300 point daily Dow swings are not that common after all...

In other words actual volatility feeds back into options implied volatility, making the highly popular volatility short trade highly unprofitable...

The short volatility ETF:

(Implied) Volatility is rising, because (Actual) volatility is rising, making it more expensive to hedge.

And we ain't seen nothin' yet...