VIX Elephant Poised to Lose $20 Million Escapes With $2 Million Loss

IMG Auteur
Published : December 01st, 2017
484 words - Reading time : 1 - 1 minutes
( 0 vote, 0/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...
Category : Opinions and Analysis
A VIX spiked today enabled a trader known as the "50 Cent Elephant" to escape his VIX bet with minimal losses.

The VIX, a measure of S&P volatility usually drops when the market rises. Yesterday, despite a huge rally on news that the Senate had reached agreement on a tax bill, the VIX spiked.

Today, equities are down sharply and the VIX up sharply on news former national security adviser Michael Flynn would implicate members of President Donald Trump’s transition team in the probe into Russian meddling in the 2016 election.

This two-day move enabled the "50 Cent Elephant" to escape an enormous VIX bet with minimal losses.

A trader who’s known as the Elephant for making big moves in the VIX -- but who’s been surprisingly quiet in recent weeks -- returned with a vengeance to start December, buying and selling more than 2 million contracts Friday to continue betting on a modest rise in the Cboe Volatility Index. That’s three times the average daily volume for all VIX options.It’s also a good day for “50 Cent” -- the options buyer who’s been saddled with the same nickname as rapper Curtis Jackson III for buying options at or close to 50 cents. Early on Friday morning, 50,000 January VIX call options with a strike price of 21 were purchased at 49 cents apiece before the Flynn tumult began.Pravit Chintawongvanich, head of derivatives strategy at Macro Risk Advisors, said the investor had been poised to lose $20 million to $30 million on the December leg of this trade before Friday, but was able to escape with a loss of less than $2 million in closing up those positions.“They got really lucky with the selloff today,” Chintawongvanich said. “They were down a lot on the December position, and this allows them to get out of it without too much of a loss.”The mystery trader also initiated positions in January VIX options to roll over this trade, selling 262,500 puts with a strike price of 12 and 525,000 calls with a strike price of 25, while purchasing 262,500 calls with a strike price of 15.

Mystery Trader

On August 8, I commented on a December VIX options bet by billionaire bond guru Jeffery Gundlach in Is Gundlach Really Bearish? (Here’s a Hint: No) .

“I think going long the VIX is really sort of free money at a 9.80 VIX level today,” Gundlach said. “I believe the market will drop 3 percent at a minimum sometime between now and December. And when it does I don’t think the VIX will be at 10.”

"I’ll be disappointed if we don’t make 400 percent," said Gundlach.

I do not know if this is the same person or not, but Gundlach isn't really bearish.

Gundlach commented that If stocks fall (they didn't), “It will be contained and you can buy it.”

I commented, "Wow, talk about embracing the bubble."

Source : www.themaven.net
Data and Statistics for these countries : Georgia | All
Gold and Silver Prices for these countries : Georgia | All
<< Previous article
Rate : Average note :0 (0 vote)
>> Next article
IMG Auteur
Mish 13 abonnés
Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. He writes a global economics blog which has commentary 5-7 times a week. He also writes for the Daily Reckoning, Whiskey & Gunpowder, and has over 80 magazine and book cover credits. Visit http://www.sitkapacific.com
WebsiteSubscribe to his services
Comments closed
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Take advantage of rising gold stocks
  • Subscribe to our weekly mining market briefing.
  • Receive our research reports on junior mining companies
    with the strongest potential
  • Free service, your email is safe
  • Limited offer, register now !
Go to website.