The Simple Long Volatility Trade
Chaudhary Charan Singh University, Meerut, India
- *Corresponding Author:
- Varish Chaturvedi, Ph.D
Researcher, Chaudhary Charan Singh University, Meerut
Uttar Pradesh, India
Tel: 088020 53384
E-mail: [email protected]
Received October 14, 2015; Accepted December 29, 2015; Published January 09, 2016
Citation: Chaturvedi V (2016) The Simple Long Volatility Trade. J Bus Fin Aff 5: 168. doi:10.4172/2167-0234.1000168
Copyright: © 2016 Chaturvedi V. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
Based on the fact that researchers are only just beginning to address the question of what we mean precisely by risk or volatility, and how best to model it, investment opportunity is clearly indicated. This opportunity reflects the potential for generating abnormal returns through identifying and executing trades based on volatility. The evidence to support this in favors of traditional portfolio strategies is that volatility processes are eminently more persistent and forecast able than asset return processes. Following this, there is a view that volatility arbitrage is likely to prove one of the most fruitful investment opportunities in the next decade, providing adequate means can be found to describe and model the underlying process.