What better post-mortem on the events from last week when the long-awaited volocaust finally hit, than one from Eric Peters, CIO of One River Asset Management, who just one month ago we wrote is “Betting All On A Volatility Eruption” as “A Historic Reversal Is Coming.” He was right.

As a reminder, back in October, we discussed a report  that several hedge funds have sprung up with just one strategy in mind: preparing for the arrival of the “fat tail”, i.e., betting on a sharp spike in depressed, comatose volatility. One among them, was One River Asset Management, a manager of $700 million led by Eric Peters in Greenwich.

Just over three months later, Peters’ thesis has borne out, following the biggest VIX eruption in history.

But was that it, and will vol revert back to more “conventional” level, or was last week’s move just the beginning of something even bigger?

In his latest weekend letter to investors, Eric Peters explains what the two paths ahead are, and why one of them could result in Lehman-like devastation for markets and is “bombs away for risk prices.”