It’s been a long and painful year for hedge fund manager Deepak Gulati, who finds himself on the wrong side of one of the most profitable trades in town. His Argentiere Fund lost money for 14 straight months through April by betting on rising market volatility, erasing all the gains since it started in 2013. The assets it oversees have almost halved. By comparison, an exchange-traded fund that rises when Wall Street’s volatility index falls almost quadrupled during the 14-month period. Instead of backing down, the former head of global equity proprietary trading at JPMorgan Chase & Co. -- who oversees about...