Is Volatility Gone…or Just Forgotten

By Richard N. Croft

In an environment where we see sluggish growth among industrialized countries, global deflation, weak oil prices, political indecision in the US and negative interest rates, one could argue we are living in the worst of times. Add to that mix company specific events like missed earnings and questionable government regulation and we have a classic tug of war between bulls and bears. More worrisome to me is the undue influence that company specific events are having on the broader market.

I say that because one would think in such an uncertain environment that option writers would be generating well above average returns. No so much! Mainly because uncertainty in the broader markets and even among the sectors, is not being translated into higher option premiums. Leading one to ask, is volatility gone, or just forgotten?

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