Q8A, Schweser exam 3 AM, vol 1. Solution on p.273 says that hedge fund managers use derivatives because this is “a way to more precisely express a view than is possible through the outright purchase of a stock”. What does this mean? - sticky
maybe for hedging out systematic risk?
also option trading strategies like a straddles if you think there will be high(long) or low (short) volatility.
Yeah, sure. Hedge fund managers use derivatives because leverage is better. Anyway, for example buying a call option is a bet on vol, direction, and time. Buying an equity isjust a bet on direction (maybe time).