Vol: It Never Went Away – Live with Matt Rowe & Max Wiethe

Published on
June 23rd, 2020
63 minutes

Destination Unknown – Live with Raoul Pal & Larry McDonald

Vol: It Never Went Away – Live with Matt Rowe & Max Wiethe

Live ·
Featuring Matt Rowe

Published on: June 23rd, 2020 • Duration: 63 minutes

It is easy to forget how destructive and dangerous certain things can be when long periods of time go by without them. Volatility is one of those things. For the better part of a decade, it went into hiding and came out only a handful of times, as if to remind us of its existence. With the onset of COVID-19 in March, volatility spiked and caused widespread damage across global markets. Today, just a short 3 months later, it would appear that vol has once again gone into hiding. At least that is what participants would like to believe. The reality? Volatility, measured by the VIX, continues to trade at highly elevated levels, indicating in no uncertain terms, that it could pounce at any moment. When? Why? That is what we are going to find out in this week’s segment of Real Vision Live with Matt Rowe, CIO of Headwaters Volatility.



  • RG
    Rob G.
    29 June 2020 @ 09:11
    Great intereview...You didn't need to hope Matt "took one in the a....." though Max LOL
    • mB
      marc B.
      30 June 2020 @ 22:22
  • DF
    Dave F. | Contributor
    30 June 2020 @ 03:59
    Max....wow, fantastic ending.....that was a great chuckle
    • MW
      Max W. | Real Vision
      30 June 2020 @ 13:11
      Thanks Dave! The magic of live TV 😅.
  • SL
    Shawn L.
    29 June 2020 @ 04:38
    Agreed this is an excellent interview. Thanks for leaving the ending in, very human and very hilarious. You just got lost your analogies.
  • JB
    Jamie B.
    25 June 2020 @ 07:09
    I think Max (and also Jack) are certainly the young rising stars of the RV Team. Matt was a great guest who was very clear & concise in his approach to a very important subject. Well done Max.
    • MW
      Max W. | Real Vision
      25 June 2020 @ 12:29
      Thanks Jamie, Matt is as good as it gets. It’s funny though how stars get made. Matt is in the same camp as Chris Cole when it comes to long vol and in fact Matt was the vol overlay manager of the year last year. I guess if you don’t tell a pretty story about birds and snakes people don’t seem to be as enthused.
    • AI
      Andras I.
      26 June 2020 @ 09:38
      Max: Well done, I think you really pulled this interview together. Matt's interviews are always of interest but they run the danger that only Mike Green can follow :) As someone who is obviously financially educated but only starting to dabble with options, and vol you provide a better filter to keep it digestable for the general and even more so for an upcoming RV audience. As for comparing these gentlemen, I think Chris Cole's research papers are a great place to start, even if the reader has never heard about options or the VIX (especially starting with the older ones) and still includes most things like what Matt hinted about is to not rely too much on observations based on the last decades heavily suppressed environment. Chris also presents his thesis in a coherent way to a wide audience, including his work on resilient portfolio construction. Mike Green is on a different level, his capability to explain the most complex theory in a simple, well paced way is just a pleasure to listen to. Anyways, thanks to both of you!
  • MT
    Mike T.
    25 June 2020 @ 13:53
    To know how to recognise the signs that an opportunity to trade volatility to the upside are developing AND were present prior to Wed's move lower these guys managed to make a simple thing sound really complicated. My comments herewith relates to situation prior to Wed down move. The synopsis states " it would appear volatility has once again gone into hiding.." Really? That would only apply to those that were asleep at the wheel. The following warning signs were present, two days ago. 1./ The VIX long term average in round numbers is 18, on Tuesday the VIX closed nearly double the long term average at 33.24. 2./ On Tuesday the SPX closed at 3138 and going back to the 2019, at the same SPX 3138 price point the VIX then was 15.24 over 50% less than Tuesday's close. 3./ Also on Tuesday /VX (VIX futures) were trading in backwardation once again, the change from Contango to backwardation started on June 12th nearly two weeks prior. Anyone tempted to use an ETF's to try a long volatility trade please note the following. With VXX and UVXY due to the rolling out process of the underlying VIX futures, VXX and UVXY work best when /VX futures are in backwardation due the folks that run these etf's replace expensive front month expiring futures, with cheaper back month. When /VX's are in Contango the rolling process of replacing cheaper front month with more expensive back month leads to a drag on the performance of VXX and UVXY. The ETF SVXY works best when VIX futures are in Contango. Last point, trying a long vol trade with the above ETF's is a very short term strategy, typically 2-3 days 5 at the most, then close out and move on. Why do I say this? Because Volatility spikes in Clusters for a very short periods of time, statistically lasting 5-7 days then starts to revert to the mean i.e. contract again. In the last 10 years the VIX has only got above 50 in 5 short periods of time aka 'cluster's and then contracts, which is not ideal for those that want a permanent long volatility position in their portfolio. For those that do require a long term long volatility position either as a trade or portfolio hedge, please be aware whilst the principle sounds so simple, implementing in practice is difficult in the extreme. If that's what you want, the best choice then is to pay either Matt's (or Mike Green's) company a large management fee. Btw, full disclosure I'm a short premium, aka short volatility option trader. For me the way I manage spikes in volatility is keep position size small, with strong bias towards undefined risk positions as undefined has the most flexibility to manage, adjust, hold on for the long term until it works out, I always carry short delta in my portfolio, which is a drag on P&L performance but helps to mitigate losses when VIX spikes higher e.g. back in Feb.
    • DN
      D N.
      25 June 2020 @ 23:27
      What do you think about the Tail or IVOL etfs? Both long vol and not rolling vix futures.
    • MT
      Mike T.
      26 June 2020 @ 09:32
      personal opinion, others may disagree. TAIL and IVOL are not viable trading instruments. Two, but related, problems: 1./ the number of average shares traded per day is neglible i.e. shares themselves are illiquid. 2./ then the killer for me, TAIL does not have Options at all. IVOL does have Options but these Options are highly illiquid, there is almost zero open interest hence the spreads are so wide as to make such options 'untradable', I say spreads but in many of the listed strikes there is no spread as most are showing ZERO BID price. The Market Makers are just not interested, and without an effective Market, TAIL and IVOL are both for me at least 'no go' ETF's Slightly off topic, and again personal opinion, one of basic value adds for trading options rather than shares outright, Options are leveraged instruments, and once educated on how to use Options, provided a more efficient way to deploy capital over trading shares outright. Lastly, having highly liquid Options is VITAL. As stated previously, I primarly look where ever possible to use Naked options strategies, in the jargon 'short (sell) premium' aka 'undefined risk', short vega (volatility) Portfolio. The primarly benefit of undefined risk are many & numerous, but the number 1 benefit, often not fully appreciated by many, short premium, naked options positions that do NOT have protective wings to define a max loss (purchased/debit long options) a Naked position can be adjusted/managed almost continously e.g. roll puts up, roll calls down, roll out to next cycle and at every step collecting more $$ Credits to mitigate risk. With the ability to constantly adjust, it's possible to stay in an undefined risk position if/when it starts to go wrong, for a significant period of time. often many months, for this approach to work it's essential the spreads in the options are really tight e.g. $0.10 max other wise at each step of adjustment effectively closing an existing strike for a debit and selling/opening a new option position for a $$ credit. Wide spreads would make this approach impossible.
  • PG
    Philippe G.
    25 June 2020 @ 19:52
    Appreciate these regular conversation with Matt R. - great communicator on the technical aspects of options, volatility, etc... for the humble retail investor such as myself! Lol - little slip of the tongue by Max at the end...no worries. Keep up the great work!!
  • DP
    Duane P.
    25 June 2020 @ 18:38
    Very valuable info in this! Max did a great job asking the right questions too!
  • AH
    Attila H.
    25 June 2020 @ 16:58
    Very good interview, I've learned a lot. Thanks
  • CD
    Chris D.
    25 June 2020 @ 13:54
    Matt is always excellent, he is not ultra high energy, but he knows his shit, cold. And Max did a good job interviewing for sure! This is the type of video you watch 5 times and will learn stuff every time
    • CD
      Chris D.
      25 June 2020 @ 14:01
      And yes, that was the single best ending ever :) It happens, don't sweat it. Was hilarious!
  • KO
    Kieran O.
    25 June 2020 @ 13:10
    Great questions
  • JB
    Jamie B.
    25 June 2020 @ 07:42
    Funniest finish to an RV interview yet. Don't worry Max we knew what you meant but you literally made me laugh out loud : )
    • MW
      Max W. | Real Vision
      25 June 2020 @ 12:25
      A bit of a Freudian slip perhaps. Matt was a good sport and we had a good laugh after the fact.