Hedge Funds Are Betting on the VIX and VVIX Divergence

On this episode of The Hedge Fund Podcast, Lucas and Luna analyze the current divergence between the VIX at 15.81 and the VVIX at 86.03—a volatility-of-volatility signal hedge funds are increasingly trading. With the S&P 500 near all-time highs at 7,564 and the VIX dropping 4.7% in a week, the VVIX remaining elevated suggests options dealers are pricing in tail risk. The hosts break down how funds are using VIX futures, options, and variance swaps to bet on this gap, referencing the recent CFTC lawsuit against Rhode Island over prediction markets as a parallel regulatory uncertainty. They also explore whether the VIX-VVIX spread has historically predicted drawdowns, and what it means for portfolio hedging today. A focused look at one of the most nuanced trades in volatility markets. #VIX #VVIX #VolatilityOfVolatility #VolatilityArbitrage #HedgeFunds #OptionsTrading #Derivatives #TailRisk #VarianceSwaps #S&P500 #MarketHedging #CFTC #PredictionMarkets #RiskManagement #Finance #AlternativeInvestments #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo