HVOL Arb Question
I am new to the credit space. As I read traders end of day summaries, what is meant by "Hvol Arb" or "Index Arbitratge" in general?? I know the HVOL is an index traded on spread.
If a trader summarizes "Feels like morning HVOL arbs took dealers long risk and they covered with IG and HY short risk" .
Does that mean accounts bought the HVOL from the street dealers and then "they"(meaning the dealers) went out and covered their long HVOL position by buying(shorting risk) on the IG and HY indicies?
sounds like they tried to arb similar credit positions between the HVOL names and the names in IG/HY -- long risk i guess is buying protection, vs. selling protection that's tightened up in the HY/IGs. Just a guess, but that's what it sounds like?
long risk is selling protection
seems like clients thought HVOL was cheap and were buying protection and selling single names. This means dealers had to be selling protection and they covered by buying IG and HY protection.
whoops....thanks for the clarification
Fugit quisquam earum saepe. Delectus consequatur rem rerum temporibus. Sint eveniet dolor qui et et quia sequi.
Sint magni esse nulla quo praesentium harum numquam vero. Voluptatem nam aut odit consequatur molestias. Rerum rerum recusandae repellat. Molestiae aperiam soluta excepturi qui aut qui corrupti.
Quis voluptatem natus expedita omnis recusandae enim tenetur. Quo mollitia maxime doloremque eum. Fugiat hic autem natus harum et modi natus. Vero natus odio neque deleniti cum officiis. Enim deserunt corporis ut.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...