This Odd Lots podcast episode discusses the rise of derivatives trading, particularly short-dated options, among both retail and institutional investors. The hosts interview Benn Eifert, who analyzes the strategies employed, highlighting the risks involved in blindly following online influencers' claims of easy profits. Eifert explains that while some institutional uses align with specific hedging needs, many strategies, like the popular "wheel" strategy, are inherently short volatility trades, masking their risk. He also discusses the emergence of buffer ETFs, revealing their often-underperforming nature compared to simpler alternatives. The interview concludes with a discussion of the Allianz Structured Alpha blow-up as a cautionary tale of flawed strategies and misleading risk reporting.
