Skip to comments.Some Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within The Next 60 Days
Posted on 02/06/2013 7:21:55 AM PST by blam
Some Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within The Next 60 Days
Stocks have been rallying relentlessly to post-crisis highs.
Meanwhile, the volatility index (aka the VIX, aka the "fear index") is near historic lows.
But according to UBS's Art Cashin, some options trader has made an enormous $11.25 million bet that the VIX will explode higher very soon.
And a rally in the VIX is usually accompanied by a drop in the stock markets.
From this morning's Cashin's Comments (emphasis ours):
A Very Big Bet In A Somewhat Unlikely Instrument My friend, Jim Brown, the ever-alert consummate professional over at Option Investor pointed us to a rather unusual trade. Here's what he wrote in last night's edition of his valuable newsletter:
In past years I have reported on trades that were so large it appeared someone had inside knowledge of a pending event. Sometimes those were massive put positions on the S&P. A new trade just appeared that suggests there will be a market event in the near future. Last week somebody put on a call spread on the VIX using the April 20 and 25 puts. They bought 150,000 contracts for a net of $75 per contract. That is an $11,250,000 bet that the VIX will move over 20 over the next 60 days. You would have to be VERY confident in your outlook to risk $11 million on a
Jim then goes on to list some of the scheduled events and deadlines visible over the next 60 days (mostly in Washington). When you add in the broad variety of geo-political possibilities, it's a decent reason to stay extra alert.
Hopefully, this person is wrong.
(Excerpt) Read more at businessinsider.com ...
Wonder what his Freeper name is...
Well that is a very specific headline
Maybe it’s a fund that has several hundred million in bull market investments and they’re hedging.
Sounds like something Soros would do.
We know what it is. The Romans named the third month of the year March for it.
11,25 mill? That’s a “very big” event?
It’s this right after Q1 results come out?
Someone wealthy is expecting trouble April 19th.
Actually, rich people have backed whacked ideas and lost their shirts on all sorts of stuff. There is a meteor passing rather close to us in a week or so.
I have learned to pay close attention to things like this posted on FR.
I remember reading the first indications of the mortgage crisis here on FreeRepublic. I also recall reading about the unusual shorting of Munich Re in early September of 2001 - prior to 9/11.
Seen this happen before. Usually before some terrorist incident. Happened for 911.
That was my thought as well.
I suspect that, in proportion to normal trading in that index, it is a big bet, particularly in futures, which are by their nature a leveraged investment.
Did the list include that
>>>The White House has confirmed that Obama is planning his first trip to Israel since being elected president in March. He will also visit Jordan and the Palestinian Authoritys seat of power in Ramallah. <<<
When I look at stocks on my brokerage site I see ratings from about six different rating agencies. Sometimes they agree on buy or sell and sometimes they are all over the map. Sometimes I get good advice from Blam:)
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