Question

Recently, stock market suffers a lot of volatility and you believe the market volatility with continue...

Recently, stock market suffers a lot of volatility and you believe the market volatility with continue in the near future. Which of the following investment choices does not fit your belief?

A. Long market volatility index funds like VIXY.

B. Long market index funds like SPY.

C. Purchase a straddle on S&P 500.

D. None of the above.

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Answer #1

When I am believing that the volatility will go up the appropriate strategies would be to buy the Vix options while I may go for buying a struggle which will include buying a call option as well as a put options of the same strike price.

At times of volatility rational investor would not long market index funds like SPY because at such times these index funds lose a lot of their value.

So the investment choice not fitting into my belief is- (B)Long market index funds like SPY.

So the correct answer would be option( B )

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