Vexed by the VIX

Risk managers found the natural limit (the integral value) associated with using derivative-financial products.

When the trade gets “too crowded” (too dense) there is a reflex point (the risk goes gamma). By default, there is a reversion to the mean identity (from that which it was derived), which is a natural identity expressed as a mathematical abstraction.

Using derivative devices, the point of inflexion has a measurable, observable, symmetry under transformation.

The Financial Reform and Modernization Act (a Clinton administration legacy) is the blueprint for knowing what the natural identity “actually” is. This process of discovery can and will take place in the realm of positive law, which discovers what the natural law actually is in the real world of measurable consequences associated with hedging the risk, the sum of which is naturally “zer0,” fully assumed in priority, determined (on demand, i.e., actualized) at the point of inflexion.

Mapping operant identities (the conditions that actualize, or make for, a measurable existence) is a philosophical pursuit; and if we want to know what the real, natural identity is (with the definable limit expressed in nature without ambiguity) then we have to discover it (actualize it) on demand.

Financial-risk managers found the limit on the VIX. Vexed by its discovery, assuming the losses to be hedged, they are now, again, using it to “short the long rate of interest” derived from an equity interest that has a strong, upward, accelerating trend, due to rising income inequality.


About griffithlighton

musician-composer, artist, writer, philosopher and political economist (M.A.)
This entry was posted in Political-Economy and Philosophy and tagged , , , , , , . Bookmark the permalink.

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