Demand for downside puts keeps skew high

The turn of the skew


Equity derivatives desks experienced a white-knuckle ride in the second quarter of this year, as the European sovereign debt crisis caused volatility to soar. Today, many market parameters remain stretched, but there are few participants able to take advantage of the dislocation. In fact, dealers say liquidity in volatility products has diminished globally, thanks to a confluence of factors including market uncertainty, regulatory change and a lack of hedge fund activity. Some bankers even point