What's the Big Idea? Volatility Isn't Dead, It's Just Weird

Tracy Alloway discusses the current state of market volatility, emphasizing that while average volatility is low, markets are still prone to sudden spikes known as gap risks. These spikes can affect short-term investors more than long-term ones. The discussion includes insights from HSBC and other analysts on how gap risks can create feedback loops in markets, potentially leading to significant price jumps. The S&P 500 Futures contract's recent movement is highlighted as an example of these dynamics.

What is the main idea introduced by Tracy Alloway regarding market volatility?

• Market volatility is irrelevant to investors.

• Market volatility is completely dead.

• Market volatility is low but can spike suddenly.

• Market volatility is high and constant.

What does the CBOE volatility index indicate?

• Long-term market predictions.

• Constant market stability.

• Gradual changes in market trends.

• Sudden spikes in market volatility.

According to HSBC, who should be most concerned about gap risk?

• Short-term investors.

• All investors equally.

• Only market makers.

• Long-term investors.

How might gap risk affect market makers?

• It stabilizes market prices.

• It creates a feedback loop in markets.

• It has no effect on market makers.

• It reduces market liquidity.

What is a potential consequence of one-way market flows changing direction?

• No impact on market prices.

• Significant price jumps or gaps.

• Gradual price adjustments.

• Increased market stability.