Donald Rumsfeld was on to something when he contemplated the importance of ‘known unknowns’ and ‘unknown unknowns’ in a famous 2002 press briefing. True knowledge is not what you know but certainty in what you do not. Trading volatility is about putting a price on that. The trader of volatility must be able to identify those Rumsfeldian ‘known unknowns’ and ‘unknown unknowns’ and simultaneously make a market in both.
Buying a Vix future, variance swap or put option provides exposure to the collec
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