Short-Volatility Trades Are Back and at a Much Bigger Scale

Short-volatility bets were a key factor in the stock plunge of early 2018 when they wiped out in epic fashion. Now they’re back in a different guise — and at a much, much bigger scale. Shorting volatility can mint reliable profits, provided markets are calm. But with the trade sucking up assets and major event risks like the US presidential election on the horizon, some investors are starting to get nervous.