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
Sam Ro
February 6,2013
CNBC
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
(snip)
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?
Ummm...
It’s this right after Q1 results come out?
Someone wealthy is expecting trouble April 19th.
Blam. ;)
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 Authority’s seat of power in Ramallah. <<<
‘Israel Thirsts to Hear Obama Directly’
Soros.
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:)
Astronomers Have Never Seen An Asteroid This Big Come So Close To Earth
BOFA ANALYST: 3 Reasons Why Investors Are Too Complacent About The Upcoming Sequester
My son is a 12 year employee physicist(PhD) for a defense contractor and he's concerned.
This is balony ... if you are entering a long or short CALL spread position, you are using CALLS ... not PUTS.
People don’t realize that when spending is cut, jobs are cut. That is where money goes when it is “spent”. If you cut spending drastically, there will be a lot of layoffs. The problem we now have is that the FedGov now has a sembiotic relationship with the private sector’s economy. If the government really does all the cuts us conservatives would like, it would destroy the economy.
In fact, the only thing they can do that does NOT destroy the economy is kick the can and try to inflate us out of this. Problem is, that destroys it too. It just happens later.
It’s why I say there is no human solution to this. We are in this all the way to the bottom. And it is not just the US. It is the world’s entire economy/civilization. This will leave a mark.
The Comedian...
It is a very leveraged bet against market complacency. Makes perfect sense since, by all historic measures, the stock market is at a record level of overconfidence. Although the options expire in 60 days, the buyer has to see a strong market move (probably down) much sooner than that or the option value will have been lost.
Little fracas in the vicinity of Lexington, MA, and then in Concord, MA, as well. 1775 or thereabouts.
ZX12R ~ Waco slaughter, and the Oklahoma bombing as revenge for it. Both 19th.
While not disagreeing with an April 19 date, I think the big event will be later.
The Benghazi attack was timed to blur the focus on, to steal a little power from, to overwrite the big event a decade earlier.
Oklahoma City was to take back the date from Waco.
The most horrible date in human history (according to anyone invested in dominating others) is July 4th.
That's the day the real trouble starts.
If it’s a VERY big event it might be so big that he won’t get paid. So said trader is hoping for something bad but not too bad so as to take the financial system down with it. Just sayin’.
$11.25 million in an option is pretty big as their is a multiplier effect of the option. It’s not a straight trade.
Ditto. We're still in sync.
The Norks are getting to test their big boom rocket thingy.
Something terrible has ALREADY happened. Around November last year. The RATS stole the election and are still in power.
Possibly simply hedging some other bets that rely on a market drop?
Not much of a boom, more of a *pop* exactly what a neutron bomb is supposed to do.
Are the Norks skipping over the big boom stage of development and going directly for neutron bomb and Super-EMP weapons?
They have already demonstrated the ability to orbit a payload.
Used to see his posts all the time
Yes. He has utterly vanished. Not just from FR, either.
There are few things on earth I would like more than to hear from him.
Nope - They bought the april 20 calls and sold the april 25 puts.
This reduces the cost of the bet by trimming the upside potential.
That article notes that the asteroid will reach the closest point at about 2:24 Eastern time.
They don't bother to say WHAT DAY. Just sometime "next week".
Wow. Bummer.
Some Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within The Next 60 Days
Pinging All.
Check out comments, too.
.
It's even scarier for me...I think they won it.
Yeah I miss him too.
Same thing happened to FReeper RightWhale...here one day, gone forever the next. No-one knows anything.
If they bought puts they’d be betting that the VIX would go down, not up.
Not quite, The Comedian told us he was going to vanish from FR, then he did.
I just didn't think his web site, email and phone would all go dark as well.
I think of RightWhale every time Alaska is in the news.
$11 million isn't that big of a bet on Wall Street.
What's interesting is the chosen trading vehicle...
This is the 3rd or 4th time...I've heard someone say...in the next 60 days..something big will happen.
We shall see..........
HMM
Beware the Ides of March...
Same with BP2, Natural Born 54 and many others. You’d think if they were taking a leave of FR they’d say so so we wouldn’t be left worrying.
Thanks blam for the heads up!
The Economy just might go Bottoms Up.
Scared and shaken now with fright,
Knowing that our politicians might,
Wait to watch the Treasury Bubble burst.
As we lemmings our trust must hinge,
President Jarrett will have her REVENGE!
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