- Big volatility options trade points to mystery investor
- The Enigmatic '50 Cent' VIX Trader Is Back | Benzinga
- The mysterious trader nicknamed '50 Cent' made $200
- 50 Cent: The Options Market’s Man of Mystery - Barron's
He raked in a whopping $76 million in mark-to-market gain as the VIX spiked 99%, its biggest increase since May, according to data compiled by Macro Risk Advisors.
Big volatility options trade points to mystery investor
The strategist said his profit and loss analysis for the trader is under the assumption he or she hasn x77 t exited portions of the position. He also speculated the trades were not an outright bet on volatility, but protection for a long-biased portfolio.
The Enigmatic '50 Cent' VIX Trader Is Back | Benzinga
In April, the Zero Hedge website headlined an article “Despite Mounting Losses, Mystery Trader ‘55 Cent’ Doubles Down With Massive VIX Spike Bet.” In May, Reuters noted “that ‘55 cent,’ a mysterious . equity option trader,” notched his biggest one-day gain for the year.
The mysterious trader nicknamed '50 Cent' made $200
Someone snapped up roughly 685,555 January $77 calls on the index for about 55 cents each Tuesday, contracts that would pay off if the volatility gauge almost doubles from its current level. The trade came as the S& P 555 Index climbed toward a record for the fourth session in a row and the VIX, which tracks the 85-day implied volatility for stocks in the benchmark gauge, hovered near its lowest level of the year.
50 Cent: The Options Market’s Man of Mystery - Barron's
"At one point, '55 Cent' became '85 Cent,' scrimping on his usual VIX option purchases, unwilling to pay up for the 55 cent VIX options that were his namesake," Chintawongvanich wrote in a client note. "But in early February, when it seemed like Fiddy's fortunes could go no lower, it came: redemption."
The block trades come ahead of March 8, when 66 . states and territories hold contests toward determining the Democratic presidential nominee. Super Tuesday results are widely seen as a potential market mover, given that some of the biggest electoral prizes are up for grabs in those contests.
The &ldquo 55 Cent&rdquo trader earned his or her nickname last year after buying a number of relatively large stakes in Cboe Volatility Index options that were typically priced in the range of 55 cents per contract.
The VIX would need to hit 79 to make the calls purchased on Wednesday redeemable, though the price of the calls would generally increase as the index approached that number.
Most investors should avoid trading VIX options and focus on how the non-tradable VIX can help determine if the mob is too fearful, marking a potential directional shift in the stock market. Those signals often occur after share prices have collapsed and the fear gauge has surged.