Jeff Gundlach Thinks S&P 500 Puts Are Cheap

Paterniano Del Favero
Agosto 9, 2017

Instead of continuously looking to scale its size, Gundlach told Bloomberg's Erik Schatzker that his firm may stop soliciting for new clients once its assets under management reach $150 billion.

The goal is for funds such as the DoubleLine Total Return Bond Fund to be stoked with client money that can be used with more focus on specific parts of the market.

Gundlach mentioned both emerging market dept and high yield bonds as areas to avoid due to their high valuations, in Tuesday's Bloomberg story. He added that the March puts in the S&P 500 are also very attractive because the implied volatility is very low.

As a result of the muted market performance, the CBOE Volatility Index (.VIX), widely considered the best gauge of fear in the market, has persistently held near historical lows around 10 or below this year and hit an all-time low of 8.84 on July 26. But since then, it has since earned returns that are "like free money", Gundlach said.

That said, if the stock market pullback is driven by seasonality or a change in investor sentiment, Gundlach said he thinks "it will be contained and you can buy it".

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