Short-vol products pose new risk to investors, experts warn
Vix manipulation reports may be leading investors to pile back into risky short-volatility products
The Vix index is known as the financial market’s fear gauge but a whistleblower letter sent to US regulators alleging manipulation of the index has raised fears of a different kind: that investors may continue to underestimate the underlying risks of volatility products.
The letter followed soon after a short, sharp sell-off in the S&P 500 index of shares, which sent prices tumbling and caused a spike in the Vix index of volatility. A lengthy period of low volatility leading up to this point
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