John Sindreu
speaker
195 appearances
4 recordings
1 series
first heard Feb 2018
last heard Mar 2019
John Sindreu’s voice in public audio — every appearance, attributed to the second.
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Appearances
Well, at the center of that, there's banks.
Banks are the ones who actually connect both markets.
Because if you are an investor and you're trying to bet against volatility, then, well, someone else needs to bet for volatility because, you know, there needs to be two to tango.
So these...
other partners are the banks on obviously on a net basis there's investors you know that do both things but on a net basis there's banks on one side who actually are to service their clients they're forced into you know actually buying that insurance and they need to bet that volatility will go up but banks are not in the you know usually in the business of making these kind of bets they basically are just servicing their clients so what they do is they offset
all these bets that they're having to take in this VIX market in the actual stock market.
Well, you know, there's different kinds of investors and some investors actually like volatility because it's a chance for them to buy stocks that they might like, but who they, you know, they might think, well, they're too expensive, so I'm going to wait for it to dip.
And, you know, the reality of the market is that we like to think about it as this
you know, perfect place where extremely rational people encounter each other, and they always make, like, the strict rational choice.
But reality is that the market has a lot of irrationality to it, and it also has a lot of liquidity needs.
As I was saying before, like, actually, if you sell insurance against something, you tend to win.
Like, it's a good thing to do.
So, you know, the market was technically doing the right thing, but that doesn't mean
that when the tornado comes and you have to pay out, you've sort of been ready for it because you don't know when the tornado comes.
And, you know, it is very hard for markets to be strictly rational because no one can see the future.
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