Remember that big bet on the VIX?

Originally posted by leo123
Question remains, why was such a huge bet made.

being a "retired" day trader, the VIX was at an insanely low number. all it shows is volitility, that's it...for it to go lower that an "eleven" handle and stay there...you would practically have to have a trading range for a period of time, of very little movement either up or down.....since the market is making all-time highs, plus, the tension of the budget and threat of sequestration, couple that with north korea, iran, syria, it stands to reason there will be a correction, thus VIX would go up...and a 20 handle on the VIX is not that unusual. that's just my opinion, of course

Jimmy:

That said, pretty ballsy to make that large of a bet with only a 2 month contract though, IMO.

Yes, I recognize from a previous poster that you don't need to necessarily go above the strike for the time premium to get going, but the reality is, as you say, you *DO* need significantly increased volatility, and it usually comes on the downside.

The person making this trade likely has several hundred million in the market and this trade is a hedge to ensure they keep this years gains.

Here we go!

Dow down 216, most of it in the last hour.

This is not my field of expertise, but could it be that this huge bet is essentially a self fulfilling prophecy, in other words the fear index is going up because of the big bet?

Or would that bet play little factor into the VIX right now?

Originally posted by Sek82
This is not my field of expertise, but could it be that this huge bet is essentially a self fulfilling prophecy, in other words the fear index is going up because of the big bet?

Or would that bet play little factor into the VIX right now?

Wouldn't be my take on it.

Today's action is more likely as a result of what's happening with Italy's government.

reply to post by leo123
*nod*, this is why I ask.
Will continue to watch as it develops.

Eta: Dow and S&P 500 post worst day of 2013

reply to post by davjan4


Wondering if we should go to the UK. My partner is from Britain and he is wearing his bible glasses believing good wil trump evil. I reminded him if the Holocaust. For the most part they believed that God woudn''t dare allow for them to be exterminate as many told them the very fact was true.

My Brit is former SAS and believes if the worst comes then he can adapt and overcome. Even though there aren't any GOOD or BOB bags prepared, His home country would never diabolically led us into the lion's den because all hail(sp?) the queen,

Funny thing he tells me I have become completely paranoid or buy a pair of said glasses as mentioned above!

I guess he is the prodigy of socialism.

When the dollar falls what happens when all the gold is found to be tungsten and many countries could be right tissy! Could the petro dollar fall how would our troops feel about proctecting the thieves?

reply to post by jimmyx


exactly. if you look at just the last year, the VIX has been all over the place. if the stock market is volatile, i don't know what is. the guy obviously made a smart bet

Quick question for someone trying to understand this. Is there a VIX for the american and european markets, and if so did he bet on the American VIX or the European one or are they both the same. If the same this article makes this guy a genius because it is stating the VIX has in fact gone over 20 to almost 26%

VIX

So does this mean buddy makes out like a king or does he have to wait till april or does he collect when the bet matures such as now. Or was this just Europe and the bet placer is still waiting on the American one??

Curious

SaneThinking

reply to post by SaneThinking


Yes, there's VIX or variations of it for most if not all indices. It's just a measure of implied volatility of the underlying instrument or market. I believe its most commonly used in options pricing models and hedging strategies.

The trade we are talking about is on the US VIX, I remember reading about the trade before it was posted here.
He could sell the options he purchased at any time prior to expiry, and likely has already....as one previous poster mentioned VIX was over 26. The guy made a literal killing.

It's actually pretty easy to calculate a theoretical return if you look up the trade dta for the day of purchase, and assume a sale when VIX hit 26. I couldn't be bothered with it personally, but the info is there if you're interested