turning convexity into cash the discipline of activetail hedge management
Most institutions treat tail hedges as static insurance policies or philosophical bets on volatility. This paper reframes them as liquidity instruments –designed to deliver spendable cash precisely when the rest of the portfolio cannot.
Mike Duncan outlines a practical operating doctrine for turning mark-to-market gains into usable capital, enabling teams to emerge from a crisis stronger rather than merely less damaged. The framework covers:
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Pre-committed authority and trigger ladders that remove hesitation
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Monetisation discipline through staged realisation and proceeds control
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Governance design that transforms policy into action within hours
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Behavioural and operational guardrails for executing under stress
The message is simple: success is cash, not marks. Institutions that rehearse the process in advance can respond to dislocation with clarity, liquidity, and confidence.
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