HVOL Arb Question
I am new to the credit space. As I read traders end of day summaries, what is meant by "Hvol Arb" or "Index Arbitratge" in general?? I know the HVOL is an index traded on spread.
If a trader summarizes "Feels like morning HVOL arbs took dealers long risk and they covered with IG and HY short risk" .
Does that mean accounts bought the HVOL from the street dealers and then "they"(meaning the dealers) went out and covered their long HVOL position by buying(shorting risk) on the IG and HY indicies?
sounds like they tried to arb similar credit positions between the HVOL names and the names in IG/HY -- long risk i guess is buying protection, vs. selling protection that's tightened up in the HY/IGs. Just a guess, but that's what it sounds like?
long risk is selling protection
seems like clients thought HVOL was cheap and were buying protection and selling single names. This means dealers had to be selling protection and they covered by buying IG and HY protection.
whoops....thanks for the clarification
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