This page has been archived and commenting is disabled.
Betting On "The End Of The World" Just Returned 2400% In One Day
On Friday afternoon, while the VIX was jumping as stocks were sliding, and well ahead of Monday's brief but systemic ETF failure which led to a VIX explosion, marketwide halts and a 1000 point Dow Jones collapse, we pointed out a disturbing event: someone was aggressively buying insurance against a market catastrophe by loading up on all the VIX September 50 calls they could get their hands on. In fact as of lunch time, some 625 calls had been purchased at a price of about a dime.
This is what we said last Friday:
"what would be far scarier is if whoever is suddenly offering a nickel for the VIX Sept 50 calls actually knows something. Because if he "does", that would suggest a market move 'Straight out of Lehman.'"
Fast forward to Monday, when we had a market move that was, drumroll, Straight out of Lehman indeed, and shockingly, the VIX 50 calls, which were bought when the VIX was trading at half that value, were briefly in the money!
And, as the chart below shows, in this case betting on the end of the world was perhaps the most profitable trade of the year: purchased on the offer at 10 cents, the calls traded as high as $2.50 one trading day later, a 2,400% return in one day. We tried to do an XIRR analysis what that return would look like annualized but Excel simply Reffed out.
Even if the buyer had not sold, and held on to yesterday's closing price of $0.95, the return of 850% would put 100% of all hedge funds to shame.
It appears that sometimes betting on the end of the financial world not only pays off, but could be the trade of a lifetime... just be sure there is a market on the other side, to close it out.
»
- 36552 reads
- Printer-friendly version
- Send to friend
- advertisements -
Bloomberg terminals are like magic money boxes !
Paging Mr. Faber ..... Mr. Marc Faber !
Mr. Faber is currently busy in Thailand, he may be found in a Bangkok brothel with some hoes and a bag of hash.
… make SURE you have someone left holding the bag.
The poor sap who get's busted and put in the slammer?
Membership to the bill boys club has its priv. Insider takedowns
I made more on my pre-9/11 airline puts, oops, no wait....
in a Bangkok brothel with some hoes and a bag of hopium.
FTFY,
;-D
Was that you, Nassim Taleb?
There's always one lucky bastard out there.
There's always one lucky bastard out there.
This time around I'm not sure you'd want to call it luck.
I guess if you have enough of "it" and have plenty of free time to spend counting it in a bunker deep undergournd with very few associates left to play with -then your definition of luck is somewhat warped!!!
I bet it wasn't a chinese farmer anyways.
Team Soros again...
"just be sure there is a market on the other side, to close it out."
This is my concern when comes to shorting all of the things.
Luck of the Irish for Paddy O'Cohen.
Luck of the Irish for Paddy O'Cohen.
After all there isn't a place they haven't dropped foot!
They even have a flower named after them and it's not the four leafed variety!!!
Let's not forget Paddy O'Furniture...
And this answers the other article's question, "was the crash rigged?" with a resounding 'yes!"
The Architect is working on a new matrix.
Architect: I am the Architect. I created the Matrix I've been waiting for you.
You have many questions, and though the process has altered your consciousness you remain irrevocably human ergo some of my answers you will understand, and some of them you will not.
Concordantly, while your first question may be the most pertinent, you may or may not realise it is also the most irrelevant.
Neo: Where is my money?
Architect: (Rolls eyes) Gone, poof! That is the quintessential function of the Matrix.
I'm certain the SEC will get to the bottom of this and hold the culprits accountable.
Yup....right after they deal with Tim C(r)ook...
#JohnCorzineLives
And promptly throw themselves in jail.
CB wanted churn, and volatility. Frankly, industry wanted it too. Be careful what you wish for.
Janet Yellen "Well a girl's gotta eat."
(OT: Silver heading for a 6 year low 13 handle, live, here: http://www.investing.com/commodities/silver-advanced-chart )
Remember this when you fail to spread your risk and say, that'll never happen.
That is my fear. Even betting right, but being such a small player that it doesn't even register, means that when you try to cash out your gains you aren't allowed to.
.
So who placed those trades?...
Do tell!
Was that 100 Contracts of 650?
Not sure how the .10 Call to rise over 50 pays out exactly...
If rose to $2.50 price, then maybe it is 650 X $2.40 (- $.10). = $1560.00
Which doesn't look like much money...
Anyone know?
Each option contract represents 100 shares of stock. Using your numbers...
650 contracts x 100 shares x a MAX GAIN of $2.40/contract = $156,000. Not bad for an investment of about $6k
I think a total of about 1300 contracts were purchased? If they were all bought for about 0.10 and sold for (LET's JUST SAY) $2.00 then the buyer made $260,000 over the weekend.
According to a poster in another thread it was Mr. Rigged. Because one man can play the whole financial world every time. "Yeah, that's the ticket."
Did the FED place the bet?
A war right about now would be really good for market confidence/investor sentiment! Who needs Bullard?
A war right about now would be really good for market confidence/investor sentiment! Who needs Bullard?
Trust them. That's the last card in the deck they will play when they don't get enough of it back through financial threats.
It's gonna be real tedious to get all that PM back they gave away these last 4 years along with the oil from places like China, India and Russia through a nuclear war!
Actually, this nothing out of the ordinary.
S&P puts and Euro calls had exactly the same move i.e 25-30 times your money in one or two days.
When you have very sharp moves like this, OTM options can really make you a lot of money, but as always TIMING IS EVERYTHING.
I once made 40 times my money on USA calls in 2 hours on the expiration day in October or November 2008 at the height of the crisis
If you're betting on the end of the world -- how do you collect?
what is the $$ size of the position??
MabbeeTheJewsWillCollectAllTheMoolahConvertIntoPaintingsAndRunAwayToIsrael
Only to be vaporized in a flash of nuke blast there