The variance swap is a way to position long or short exposure to market volatility - therefore creating a directional view of volatility. Whilst it is called a swap contract, its characteristics have more in common with an option-based product.
Variance swaps are used for volatility trading. It acts as an alternative for traders who otherwise use a delta-neutral option strategy to take a position on volatility, as the variance swap can offer a more precise way of...
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