Their gains were from leveraged directional bets and their losses were from leveraged directional bets. Seems they were margin called, so their liquidity was squeezed—poor risk management. It seems that they have learned from this and are now using “fully paid for” derivatives, so presumably call options whose premium they can afford. Hedge funds are not necessarily hedged, but eg long/short equity hedge funds are (while macro hedge funds can have all kinds of unhedged macro bets on.)
Sadly it appears that adjacency to EA correlates with poor risk management, I’m wondering whether this is somewhat structural (beyond eg the age group…)
Their gains were from leveraged directional bets and their losses were from leveraged directional bets. Seems they were margin called, so their liquidity was squeezed—poor risk management. It seems that they have learned from this and are now using “fully paid for” derivatives, so presumably call options whose premium they can afford.
Hedge funds are not necessarily hedged, but eg long/short equity hedge funds are (while macro hedge funds can have all kinds of unhedged macro bets on.)
Sadly it appears that adjacency to EA correlates with poor risk management, I’m wondering whether this is somewhat structural (beyond eg the age group…)