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+--- Thread: Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within 60 days (/showthread.php?tid=4153)
Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within 60 days - Prepper1 - 7 February 2013
http://www.businessinsider.com/art-cashin-on-big-vix-bet-2013-2
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 directional position with the VIX at five year lows and the markets trying to break out to new highs.
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.
RE: Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within 60 days - Highlander - 7 February 2013
Well,.. he assumes that he will be around to collect, so it isnt toooo bad,...
RE: Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within 60 days - Prepper1 - 7 February 2013
Plus, one mans bad is another mans not bad I suppose...
Worth watching methinks...
Up to about April 8th...ish...
RE: Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within 60 days - Scythe13 - 7 February 2013
If you think about it, it's a logical call. The market is volatile at the moment. Having a pull option based 60 days in the future, with a 5 day collection period, while the market is at an all time low....obvious play.
Add to it the size of the play and the knowledge it would be reported. This alone could be enough to rip down the market. What does that mean? The prices drop, people panic and sell. All in all...he's quids in.
It's like the flooding and ruin of the crops worldwide. Its a safe bet on crop prices increasing the years of El Ninio. The smart investors have bought the year before and made rheir profit before everyone else buys in when they realise El Ninio is coming .
RE: Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within 60 days - Tigs - 8 February 2013
if anything bad does happen , i would be looking at him very closely!!
RE: Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within 60 days - Scythe13 - 8 February 2013
(8 February 2013, 07:35)Tigs Wrote: if anything bad does happen , i would be looking at him very closely!!
Me too. I'll place my money where he does haha.
RE: Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within 60 days - Skean Dhude - 8 February 2013
Could easily be someone trying to influence the market. £11 isn't much to destabalise the West.
RE: Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within 60 days - Prepper1 - 8 February 2013
(8 February 2013, 12:49)Skean Dhude Wrote: Could easily be someone trying to influence the market. £11 isn't much to destabalise the West.
When you think about it I suppose thats true.
We judge money on what'd be a lot for us.
Thats pocket change for them....
RE: Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within 60 days - Tigs - 8 February 2013
(8 February 2013, 13:26)Prepper1 Wrote:(8 February 2013, 12:49)Skean Dhude Wrote: Could easily be someone trying to influence the market. £11 isn't much to destabalise the West.
When you think about it I suppose thats true.
We judge money on what'd be a lot for us.
Thats pocket change for them....
yeah just petty cash for me too
