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Destruction of VIX-Linked Products May Help Volatility Normalize

Bloomberg business news
VIX Tumbles After Seeing Its Biggest Spike on Record

The market frenzy that put an unprecedented jolt in volatility measures has claimed its first victims. That might be just the sedative the market needed, options strategists say.

While it’s of little consolation to anyone wiped out by the rout in exchange-traded products that move inversely to the Cboe Volatility Index, the demise of so-called short volatility products forced a mechanical rebalancing so big that it should mitigate future swings, according to Pravit Chintawongvanich, head of derivatives strategy at Macro Risk Advisors.