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As the major market indexes (^DJI, ^IXIC, ^GSPC) sell-off ahead of Wednesday's close following the Federal Reserve's cut to interest rates, what does this signal for the options market?
SpiderRock Advisors President and CIO Eric Metz sits down with the Market Domination team to speak more about where he is seeing volatility (^VIX) spikes in the equities market, expecting a climb like this to happen "multiple times a year."
"Post-election there was a lot of heightened scrutiny around where markets would go," Metz tells Julie Hyman and Josh Lipton. "so once the markets got that clarity and it was all coast is clear for risk assets specifically in equities... Largely speaking when volatility came in... a couple couple of days ago, maybe a week ago, it was one of the cheapest points in time to hedge equity portfolios over the past three to four years."
"And so when we think about that complacency, you know, it's usually mean reverting. And today's information obviously spooked investors with today's information," he adds.
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This post was written by Luke Carberry Mogan.