Despite Mounting Losses, Mystery Trader "50 Cent" Doubles Down With Massive VIX Spike Bet

Tyler Durden's picture

Three weeks ago we introduced the real "50 Cent" - the mystery trader whose pattern of huge, near-daily trades on the VIX is turning heads in the options market.

Not him..


As we detailed previously, Pravit Chintawongvanich, head of risk strategy at Macro Risk Advisors,  the huge options buyer known as "50 Cent" shows no signs of slowing down.

"I would categorize them as someone who doesn't flinch at losing money," commented Chintawongvanich who flagged the activity in a series of research notes.


The money-losing trades in question have been purchases of call options on the CBOE volatility index. These represent bets that market volatility is set to rise, and to a lesser extent, that stocks are set to fall.


Sussing out the actions of an institutional trader based on public information about options trades can be difficult, if not impossible. But this trader made it easier by leaving a clue out in the open. "They have a very particular pattern of buying options," Chintawongvanich explained Wednesday on CNBC's "Trading Nation."


"Basically they come in every day and they buy 50,000 VIX calls worth 50 cents. So in other words, they don't care too much what the strike is; they just pick the option that's worth 50 cents."

Having reportedly suffered $89 million in losses so far in 2017 however, the trader is not giving up on his strategy and just doubled-down...

On Wednesday morning, the trader, nicknamed "50 Cent" by Macro Risk Advisors because of their predilection for contracts that cost roughly that much, bought an additional 100,000 VIX calls betting that the index will climb about 40% by May.

Sending VIX Call volumes to near-record highs...

And MRA doesn't think the trader will stop there. The firm expects purchases of bullish VIX contracts to continue in the coming days.

"The amounts of money 50 Cent is spending are large, but this could be just the tip of the iceberg when you consider all the hedging that takes place over the counter as well," Pravit Chintawongvanich, the head of derivatives strategy at MRA, wrote in a client note on Thursday.


"Even in the listed space, there is plenty of hedging that takes place that may not be as obvious and predictable as 50 Cent, and thus harder to attribute to one person."

Still, positioning from hedge funds suggests the trader might be on to something. They haven't been this bullish on the VIX since March 2016, according to data from the US Commodity Futures Association.

Notably, 50 Cent's options would become profitable only if the VIX climbed to between 19 and 26, according to data compiled by MRA.


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Anarchyteez's picture

Love it.

Popcorn worthy in itself.

hsun85's picture

Let us know when 50 Cent gives up, thats the bottom for VIX.

Sizzurp's picture

The best trade is wait for the spike, then short it.  Betting on the long side will grind you into dust.

mkkby's picture

I'm sure eveyone and their algo is front running this joker.  Make him pay up, then short him into the ground.

Hey, maybe I'd make a good bankster.

hsun85's picture

Short VXX Long Call. Free money.

Boris Badenov's picture

Yeah, the calls could be a hedge. But just imagine the short squeeze on VXX if TSHTF.

Ecclesia Militans's picture

Lol guess he doesn't have to "walk the blocks with the bundles" anymore.

You go Fitty....

malek's picture

Looks more like a way to keep the VIX from spiking... now who could be inclined to do such?

Zepper's picture

If Michael Burry is 50 cent then I am would be very interested in what his strategy is.

saveUSsavers's picture

it's already movedup from 10-11 right? He's going to be right, watch

SantaClaws's picture

This guy will likely be proven right.

Before seeing the photo I had thought 50 Cent might be the E-Trade baby.

OTMPut's picture

This is probably one of those algorithmic "smart" strategies.

bentaxle's picture

Mexicans positioning to pay for the wall.

Sid James's picture

So it's someone with endless amouns of money to burn.

Is it Janet Yellen?

Occams_Razor_Trader's picture

Martingale systems can only run for a while until an outlier streak kills the bet.

It's happened before to very "SMART" people.

Models are just that- past peformance is not indicitive of future success.


Sanity Bear's picture

Give Obama a break, it's his first try at day trading and it's not even his own money.

Occams_Razor_Trader's picture

Yeah it's a never loser for him- he has wealthy friends where he can always find Mo Money!

Bill of Rights's picture

Silly Janet VIX is for kids...

Catahoula's picture

Foolish. Must be playing with other people's money. 

Yen Cross's picture

   Haha... Maybe he should switch to bonds[Treasuries]. </sarc>

  Better yet, he should start trading F/X and going "toe to toe", with the SNB and BoJ. :-C

sgorem's picture

it's NOT a "he"!! her name is yellen, and it doesn't make a fuck how much she "loses", she's backed by the good faith, credit, and hot air of the ussa! besides, she's got a tattoo "50centz" hidden somewhere on, in, under, or around the buttocks area, very close to the "enter at your own risk" tat @ the base of it's spinal column. please don't become aroused @ this image, and please don't ask how i know, but it's from a reliable source. next question....

TheLastTrump's picture

Didn't they do pretty well the last 2 weeks?


If shit gets real with NK or Le Pen wins, next week will be PAYDAY.

Yen Cross's picture

  lol.  Investors want a track record. That dolt is burning money faster than Gartman as CEO of Tesla.

 I'll bet they adjusted their BETA, because everyone knows what the game WAS NOW !

Ghostntheshell's picture

He's clearly long a massive bullish portfolio this vix loss is pennies in comparison and will eventually pay x times the amount

Ghostntheshell's picture

He's clearly long a massive bullish portfolio this vix loss is pennies in comparison and will eventually pay x times the amount

Ghostntheshell's picture

He's clearly long a massive bullish portfolio this vix loss is pennies in comparison and will eventually pay x times the amount

El Hosel's picture

Losing 89 million is no way to make a living, punk.

This should help

Occams_Razor_Trader's picture

One os Occam's top 10 favorite movies of all time!

Yen Cross's picture

   Fitty Wooden Nickels.  Bichez



  cc. Popeye

Global Douche's picture

Don't forget to pay for that hamburger on Tuesday!

Lastline's picture

Get rich or die trying.. That's the ZH credo, no?

Yen Cross's picture

 I think you're contradicting yourself?   NO<

  WE at Z/H buy "tangible assets", and don't use margin accounts on our crawl spaces.       #snowflakes

turkey george palmer's picture

Short high yield would be good what's that etf ...SJB. OR something.

 Yaaassss the default in drillers and retail will pay well

If you think making money from defaulting bonds is bad, just imagine the poor pension funds holding that junk.

But if it's your city or state fund that goes tits skyward then I guess you'll need the extra cash to bail them out


Yen Cross's picture

 Has anyone looked at the spreads [corp debt vs sovereign debt] recently?

  Ouch..l   Central Banks, own all those equities!!!!

Admiral General's picture

I invented this trade 6 years ago. This is probably one of my old clients or traders. What is overlooked here is that this is just one side of a self financing trade that is costing them zero to carry. Sort of shits on their theory here.


besnook's picture

i wondered who the other side was. what you are saying is a fucking brilliant hedge especially for this circumstance. now why aren't there more participants?

Admiral General's picture

Liquidity I'm sure. Don't want to end up in a newspaper being called 50 cent. Trade isn't the best at that size. The other side is selling puts on a more liquid underlying so it takes risk and margin. At this size spreads and commish are what eat into you so it's still expensive but it's one of the best free carry ways to cash in on volatility.

pump and dump's picture

Every time I make a trade the market moves in the other direction just like clockwork so this time I went long and short at the same time and now the market is confused.


Wild Theories's picture

I seem to recall Bin Laden hedged some calls before 9/11 as well

could this be be fatboy Kim from NK? just hedging for what he's planning to do?

Ajax-1's picture

Although I admire his bearish enthusiasm, don't fight the FED. If he keeps mounting VIX losses, he will have to change his name to "Twenty-five cents".

nailgunner44's picture

Chintawongvanich- name sound real to anyone? (((They're))) rubbing your faces in it again...

Scrimpy's picture

fitty cemp no he financial imstruments geese, yo

gm_general's picture

If he had any sense he would wait til the VIX broke above the declining VIX trend line connecting the "events"- the early 2016 routing, the Brexit and a market drop the ceased a few days PRIOR to the election. I think should it crack above that, all hell would break loose. How is he going to make up $89M of losses?

rex-lacrymarum's picture

How about he could easily make them up in just one or two days? In October 2008 the front month VIX 45 calls e.g. went from 30 cents to 34 dollars in just one week. 

Looking at more recent moves:

the weekly VIX 45 call nearest to the general monthly cycle options expiration in August 2015 went from 20 cents 10 minutes before the close on Friday to $3,60 a mere 10 minutes after the open on Monday (and they were even unable to calculate the VIX itself at the time due to some technical glitch - but the options traded just fine). 

In the above mentioned August 2015 expiration week, SPXS 20 calls were no bid on Tuesday and could be bought for 5 cents each (possibly for less with a market order - only 5c increments are permitted for limit orders in these). On Friday 15 minutes before the close, they traded at $2,10 (bid).  

My point is that when you bet on the bursting of a bubble with such options, a few "early" purchases don't matter as long as you have the staying power to be aboard for the big one.