Stock-market volatility has made betting on the speed and severity of market moves a popular—and risky—venture One of this year’s hottest trades is betting on stock volatility.
It is also one of the riskiest. Traders big and small have sought to profit from the market’s wild swings. They are doing so through derivatives and exchange-traded products that tend to profit when markets are shaky.
Some of the investments promise heightened exposure to volatility and often gain in value when stocks fall and turbulence rises.
It is the latest iteration of a long-running obsession with trading volatility since the last financial crisis, when betting on the speed and severity of market moves started to take off among retail and institutional
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