Betting on volatility begins to pay off for hedge funds

Despite a difficult global environment, betting on market volatility has lost hedge funds money – until now

Betting on volatility begins to pay off for hedge funds
Photo: iStockPhoto

Hedge funds have been losing money for years betting that financial markets will become more volatile. Now the trade is showing signs that it might pay off.

A spike in the market's "fear gauge" - the CBOE Volatility index, or VIX - as stock markets have tumbled this year has proved a boon for funds that buy options on stocks and other securities in the hope they will soar in value during times of market stress.

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