Why Selling Volatility can be a "Picking up Pennies in Front of a Steamroller"

You get the full inverse with ZVAL, meaning inverse VEX or VIX proportionally a full inverse, which in result gives you a heck of a lot more volatility, which is why it's going to kick off a much larger income stream by selling that volatility and collecting that premium. Whereas ESV tries to take away a little bit of that volatility by dialing it back to that 20 to 30% range.

To that extent, they're both going to have moments of shock, right? So just recently on liberation day, both these products, when the VIX popped up, they both got smoked pretty well, but ESV got smoked about 25% relative to the ZAL.

Selling volatility is not new. I think you need to know what you're doing and you need to understand that, hey, I'm going to pick up this premium for long periods of time, but then from time to time, I'm going to have to restart and I expect to lose a significant portion of that asset. It's a very disciplined game.

To that extent, if this is something you're looking to utilize inside of a portfolio for some uncorrelated income generation, whatever it may be, I think ESVL is better suited just because you still can get very volatile, but relative to ZAL, it's not even on the same page. It's one quarter, so it's a big difference on that front.

One thing I would say, and just generally, a lot of times people say you're selling V, you're picking up pennies in front of a steamroller. Just keep that in mind on these strategies.