This is an excellent article detailing what happened in 92.

Soros has made his billions by toppling currencies before. He almost even took down the British pound.

There are 2 competing effects -- inflation and demand. When the USD is worth 40% less, if this is mostly due to inflation, then all prices will rise about 40% (actual buying power of already owned assets like stocks almost unchanged). However, large price swings are disruptive and often reduce demand for individual assets, products, etc...

If demand falls while supply is roughly constant, then price falls. Thus, buying power of already owned assets like stocks will fall, even if notional prices are rising due to inflation.

With the Fed tapering QE, this directly reduces demand for US treasuries and mortgage-backed securities, placing downward pressure on their prices. Some bond investors who had shifted over to stocks during QE's artificial increase in demand for US treasuries and mortgage-backed securities may shift back as QE tapers off, thereby reducing demand for stocks.

So, at a minimum, Soros is hedging his bets that stock prices are likely to fall as QE tapers off. Soros may believe, as I do, that stocks, US treasuries, and real estate prices are all in bubble territory and likely to pop as soon as a large enough disruptive event occurs. If that happens, his hedged investments will do well, even as asset prices are falling...

You can easily play volatility with VIX or just by speculating on fluctuations in time premium on options on the major indices. In other words, you can buy options not close to expiration and sell them when volatility decreases or vice versa. But you still have to know which way volatility is going to go. If you think it will just stay high, you can write far out-of-the-money options each month and let them expire worthless, but you still have to *know* volatility will stay high.