The Option Trader’s Hedge Fund: A Business Framework for Trading Equity and Index Options
by Dennis A. Chen, Mark Sebastian
Foreword
As Director of Research and Co-Portfolio Manager of Jim Cramer’s Charitable Trust, I continuously look for more effective ways to oversee the fund and improve returns. Although it is a long-only equity fund, it is imperative to have a working knowledge of all asset classes and their effects on the broader market and trading psychology. One of the most impactful metrics of managing money in today’s market is, without question, volatility.
Volatility as an asset class is a rapidly growing concept in the marketplace. Indexes and products have been introduced to trade, hedge, and use as forecasting mechanisms.
Financial media commonly portrays the VIX, or CBOE Volatility Index, as an indication of “fear” in the market. Typically, when the ...
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