Investment banks such as Goldman Sachs and Citi are deploying "crash options" to transfer tail risk, with annualized returns reaching up to 20%.
As the global leveraged ETF market approaches $250 billion in assets, major banks providing swaps and leverage support are increasingly relying on a special type of over-the-counter derivative—"crash puts"—to hedge against tail risks in extreme market conditions. According to Bloomberg, investment banks such as Goldman Sachs, Barclays, Citi, and BNP Paribas are active in this market and are promoting related trades with annualized returns of 14%-20% to institutional clients, attracting hedge funds and asset managers to act as market "insurers." However, there is concern within the industry that this highly customized, limited-transparency derivatives market could amplify systemic shocks during extreme market events.
Source:华尔街见闻 · Source Link
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