A volatility trader who looks like a bluff called "50 cents" is already planning his comeback.
Known for continuing to buy a bite-size Cboe Volatility Index (VIX) option - usually about 50 cents - the trader has traditionally positioned himself to profit from market turmoil.
However, after he was able to cash in his long-term bet in February, he was swearing. According to data compiled by Macro Risk Advisors, the VIX index surged immediately after all major US indexes shocked by 10%, and allowed 50 cents to make a profit of more than $183 million at market prices.
It seems that I can't rest, 50 Cent has returned to his old skills this week. It started early Tuesday and bought 50,000 call options with a call option price of 28 and each with a buy price of 50 and 51 cents. Then, on Wednesday morning, the same transaction was made at 49 cents.
Considering that the VIX closed at 12.28 on Wednesday, these deals are basically betting that the so-called stock market panic index will be doubled sometime this summer. And because VIX is about 80% of the time in reverse with the S&P 500, a fall in US dollar stocks could lead to a bullish VIX bet.
If at this point summer sales seem to be a distant prospect, then many experts on Wall Street have made similar predictions in recent months.
However, it is important to note that it is impossible to know for sure whether this is the same notorious trader, attracting investors' attention with a 50 cent bet in 2017 and 2018. It may be a modeled application by the original 50 cents.
In any case, it's obvious that people who prefer a 50-cent-centimetre deal to a mouthful of mouth agree that more and more experts warn the upcoming Rock Patch market.
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