‘50 Cent’ Copycat Likely Made $170 Million Hedging During Rout
- Trader bought call options on Cboe Volatility Index or VIX
- Many of the options purchased are poised to expire next week
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A million-dollar day may have turned into a hundred million-dollar month for the major buyer of U.S. equity volatility as stocks endure one of their worst sell-offs of 2019.
Late July and early August saw massive orders for protection that bore some similarities to transactions by the trader dubbed “50 Cent,” who bought a boatload of derivatives that would benefit from market turmoil throughout 2017 and early 2018. The vehicle, in both cases, were call options on the Cboe Volatility Index, a gauge of the 30-day implied volatility of the S&P 500 Index based on out-of-the-money options.