Volatility selling is down, but not out
Shrinking risk premiums could end cycle of vol suppression, traders say – but not just yet
Popular volatility-selling products such as covered call exchange-traded funds (ETFs) and quantitative investment strategies (QIS) will likely keep a lid on market volatility in 2025, traders say, but perhaps not to the same extent as in recent years as risk premiums continue to be squeezed.
“I think we are at the peak of a cycle of massive inflows into both ETFs and massive inflows into QIS selling vol,” said a portfolio manager at a large investment manager. “That doesn’t mean there will
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