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> Who is the counterparty to these trades?

Typically large trading firms, market makers.

> When the market sentiment is negative, the number of these counterparties are narrow and dwindling

That's why his $2600 initial investment made in a much calmer market is now worth $310k :)

For the right price you'll find somebody willing to sell you the insurance you seek. But in a volatile market like today, that price may be way too much for most people.



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