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RESEARCH & ANALYSIS – WEEKLY E-NEWSLETTER

 

The February '07 Volatility spike and Option Seller scare - one year later

April 21, 2008
For many stock index option selling CTAs, February 26th, 2007 is a day they won’t soon forget. Option selling CTAs were extremely popular in 2004, 2005 and 2006 as historically low volatility fed right into their short volatility strategies, creating consistent strings of small profitable months, with nearly no losing months. Zenith Resources, for example, had 40 consecutive winning months between September, 2003 and January 2007. Another, Diamond Capital, had just three losing months in as many years between 2004 and the end of 2006.

By Jeff Eizenberg


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