Next frontier for credit traders: shorting volatility

Reuters | May 17, 2019 at 11:22 AM
  • Betting on markets remaining calm has long been a popular, though risky, trade in finance.
  • Now, a growing number of banks is looking to bring such strategies to corporate credit markets, the last major asset class where so-called short volatility trades are rare.
  • It also hedges moves in credit spreads daily with the aim of providing investors exposure purely to the difference between implied and realised credit volatility.