Imagine how horrible it would be if Spain sorted its banking industry, and Greece generally got its act together. Wouldn’t it be awful if European stocks rebounded?
Investors who are negative on European equities would say so. And, naturally, they’re hedging.
“If your total portfolio is lined up for only one outcome, you may be wrong-footed,” Arthur Van Slooten, a strategist with Société Générale, told Reuters. So traders are trying to manage their event risk via options and variance swaps....