Index vol has been a poor hedge for equity rout, traders say

Single stock ‘micro’ hedges have offered more protection in this year’s selloff

Traditional long volatility hedges have offered little protection during the recent selloff in US equities, traders say, as the growth-to-value rotation left index volatility unusually subdued in the face of a sharp drop in stock prices.  

Hedging equity risk by buying calls on the Vix index of S&P 500 options volatility has proved “quite difficult,” said Marc Möhrle, a portfolio manager at DWS,