Is It Time To Reconsider Short Vol?

  Dominick Paoloni, CIMA®CIO & FounderPortfolio Manager, IPSAX Oct 4, 2019 By Elinor Comlay Global risks are rising, the Cboe’s Volatility Index is whipsawing and yet selling options is still more popular than buying. For sure, buying options means managing carry costs. But as the ongoing popularity of short vol strategies and the weight of options selling contributes to compression of the volatility risk premium, it could be time to…

Is Selling Options Still Worth the Risk?

Is Selling Options Still Worth the Risk? Dominick Paoloni, CIMA®CIO & FounderPortfolio Manager, IPSAXAdjunct Professor, University of Denver Patrick Hennessy, CMTHead Trader   I learned a long time ago as a young broker on Wall Street that when looking at a potential trade if the numbers look good, buy the position. Conversely, if the numbers look bad, take the other side of the trade. The popularity of exchange-traded options has…

Stock Turmoil Sparks a Wall Street Hunt for Cheap Hedges

  By Joanna Ossinger – Bloomberg Markets – August 14, 2019, 7:43 AM MDT Updated on August 14, 2019, 4:45 PM MDT – featuring Patrick Hennessy, Head Trader, IPS Strategic Capital – The bad news for investors who waited this long to buy equity hedges is they’ve become eye-wateringly expensive. The good news is Wall Street thinks there are a few cheap strategies left. A gauge tracking the price of bearish…

The Liquidity ‘Illusion’ Has These Funds Making Plans for a Stock Doomsday

The Liquidity ‘Illusion’ Has These Funds Making Plans for a Stock Doomsday By Cecile Gutscher and Yakob Peterseil  – Bloomberg Markets – April 10, 2019, 10:11 AM MDT – featuring Dominick Paoloni, IPS Strategic Capital founder, PM IPSAX – A small band of humans is taking up arms against the rise of the machines. Fund managers who ride big sell-offs in stocks are relishing fresh Wall Street warnings that robots and the like are…

The Portfolio Manager’s Dilemma: Timing the Market

The Portfolio Manager’s Dilemma: Timing the Market Dominick Paoloni, CIMA®CIO & FounderPortfolio Manager, IPSAXJanuary 24, 2019   At 2:32pm on May 6, 2010, the S&P 500 careened 8% in just 36 minutes before rebounding with just as dramatic of a move. The reason for this extreme volatility, according to market pundits, is that algorithmic trading firms step away from the market when they sense instability. Paul Britton of Capstone points…

Is the VIX Being Gamed? A Sudden Swoon Has Traders Talking Again

by Nikolaj Gammeltoft and Cecile VannucciJanuary 10, 2018, 4:00 AM MSTClick Here to read on Bloomberg’s website. It made for quite a chart. On the morning of Dec. 20, just as billions of dollars of futures tied to the Cboe Volatility Index were set to expire, the index plunged. The result was a settlement price, a weekly value critical to holders of some the most heavily traded derivatives in the…

Low VIX Masks Insurance Markup Options Traders Are Paying

by Cecile VannucciFebruary 8, 2017, 3:17 AM MST February 8, 2017, 6:39 AM MSTClick Here to read on Bloomberg’s website. Here’s another sign that beneath the surface of placid stock markets, investors aren’t exactly sound asleep. It’s the persistently high premium traders are paying for equity options, visible in the difference between implied and realized volatility in the S&P 500 Index. The gap, definable as the intangible cost of stock…

Low Cost Hedging Strategies in a Volatile Market

Asset allocators and portfolio managers (PM) have had many sleepless nights in 2015 with the global markets being very volatile. The S&P 500 has been essentially flat for 2015, the bond markets have been under press anticipating a rising interest rate environment, commodities have been under strong downward pressure and Europe is teetering on recession. The question is, where does a PM diversify? Read More…

IPS Found the Good in Derivatives

By: Lori Pizzani from Structured Retail Products.com Dominick Paoloni started his career in the early 1980s as many others have in the financial services industry – working at, then running, a broker-dealer firm. But he says that he subsequently realized the fallacy of the broker-dealer model, and after starting to find good investment managers, evaluating alpha and building portfolios for clients, he started his own Registered Investment Advisory (RIA) firm in…

West Coast Boutique Crafts Custom Structured Products

By: Yakob Peterseil from Structured Products Magazine Like someone who believes that what he is saying should be plainly obvious to all, Dominick Paoloni rattles off the shortcomings he sees with the structured products sold by Wall Street. These firms charge excessive fees, he says, have long tenors and point-to-point payouts, and expose investors to unacceptable levels of counterparty risk. In fact, Paoloni dislikes these products so much that six…