TY - JOUR T1 - Equity Portfolio Trading with Volatility and Dividend Derivatives JF - The Journal of Derivatives DO - 10.3905/jod.2021.1.142 SP - jod.2021.1.142 AU - Radu Tunaru Y1 - 2021/12/23 UR - https://pm-research.com/content/early/2021/12/23/jod.2021.1.142.abstract N2 - In this article, I investigate trading strategies for equity portfolio analysis that considers diversification using dividend derivatives. The equity portfolio is assumed to be perfectly or highly correlated with the Euro STOXX 50® index. The strategy employing dividend derivatives for hedging is compared with the more common strategy based on using VSTOXX® derivatives. I highlight that hedging with dividend derivatives offers a viable and possibly superior long-term alternative for hedging equity portfolios with stock index derivatives. In addition, I show that ATM volatility options could have been used successfully to hedge equity tail risk associated with the Brexit event in 2016 that caused a 9% drop in Euro STOXX 50 immediately after the vote. ER -