Dividend logo

In finance, there is no such thing as a free lunch. Every trade or investment carries some risk to justify its returns. Even safe-haven cash isn’t risk-free – inflation could eat away the low rates you’re receiving for that safety. But if there’s one thing that has been close to a free lunch in investing it has to be shorting volatility.

The measure of the market’s “wonkiness” has been dropping like a stone since the end of the Great Recession. And that’s made for easy pickings for traders looking to cash in. In fact, shorting volatility has been one of the best trades since the Recession, surpassing the returns of every asset class on the block.

However, if history is our guide, this easy street that the markets have been driving on can’t, and won’t, last. For investors still hanging on to the big gains from this trade, the heartbreak could be severe.

Learn about the different metrics used to measure and manage risk here.

To read the Full Story, Go Premium or Log In

Popular Articles

Premium Successful%20business%20transformation%20initiatives%20help%20railroad%20giant%20strengthen%20its%20position%20on%20best%20dividend%20stocks%20list
News

Successful Business Transformation Initiatives Help Railroad Giant Strengthen its Position on Best Dividend Stocks List

When it comes to finding the best stocks, we often talk about moats. These competitive advantages...

News

Canadian Pacific Railway, Realty Income Corp and Fifth Third Bancorp Increase Dividend

Each week, stocks, funds and REITs announce upcoming dividend payouts. Track how your portfolio’s...

News

Danaher Corp, British American Tobacco and U.S. Bancorp Go Ex-dividend This Week

There are several securities going ex-dividend this week starting Monday, June 24. For income...