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Ex-Goldman Volatility Trader Sees More Blood Before Rout Ends

  • Yamada says it’s hard to gauge the amount of short-vol trades
  • Says slump will eventually end because fundamentals aren’t bad
Bloomberg business news

VIX at Highest Level Since August as Stocks Tumble

Makoto Yamada, who traded index-linked derivatives including volatility at Goldman Sachs Group Inc. before joining a Japanese brokerage, sees more pain before the stock rout ends.

For Yamada, who’s now head of equity trading at SMBC Nikko Securities Inc., investors have been shorting volatility without realizing what impact it would have on the market. Now, as those trades are being systematically unwound, it’s dragging down U.S. stock indexes.