Earlier we mentioned how Doug Kass was going long volatility as a way to bet against this market, without actually committing suicide by trying to short it.
Count David Goldman as a fan of this trade.
As this FT Alphaville post notes, both SocGen and Morgan Stanley are all bullish on it too.
The bottom line is this: With stocks having run this much, and so many obvious risks staring everyone in the face, volatility seems too cheap not to buy.
What’s more, with QE2 ending — the implied Fed put or insurance goes away, meaning investors may have to buy their own insurance.
This chart from Morgan Stanley is instructive:
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