Posted on 10/13/2022 8:53:27 PM PDT by lasereye
Amid the gloom, one trade looms so unusually pessimistic that it is hard to process because the world would likely need to end, or come close to it, for it to prove profitable. The trade is predicated on the Cboe Volatility Index, or VIX, hitting 150 by March, a level that has never before been realized.
In recent sessions, an investor bought 50,000 VIX March $150 call options, paying about 19 cents per contract. The trade is so large, and so unusual, that it was almost certainly made by a wealthy investor worried about a massive stock market decline, perhaps triggered by Armageddon, or something approaching it. Since then, other investors have bought similarly situated upside VIX calls, including more than 5,500 January $120 calls.
Larry McMillan of McMillan Analysis notes that the VIX has never reached 150, though Cboe determined it would have traded above 150 during the 1987 crash. (It was created in 1993.) During the financial crisis, the VIX hit a closing peak of 80.86 in November 2008. The Covid-19 pandemic saw it close as high as 82.69 in March 2020.
Buying VIX calls with strike prices that are so far above the index’s current level could conceivably prove profitable even if the world didn’t end, if there were a dramatic increase in volatility triggered by a stock-market collapse. If the VIX hit 90—say, because Russia’s invasion of Ukraine sparks another world war—VIX $150 calls might even double in value, or more.
“Another possible extreme tail event would be nuclear war,” McMillan wrote in a note to clients. “I can’t think of much of anything else. In the case of nuclear war, though, the markets might not even be open, and this trader might not even be able to cash in on his ‘bet’ if he survived.”
(Excerpt) Read more at barrons.com ...
bkmk
The OVID-1983 “ewmergency delaration” was just extended (by7 Esecudive Ordr— whwt else) to January 11.
Drop dead day = January 12 ?
The Dukes
And the demi god Mr. S
Will do everything behind the curtains to make sure this will happen, and damn that girl in the Silver slippers
If Democrats keep congress these calls are excellent bets. But that shouldn’t happen unless the democrats figured out how to cheat in Rural districts. So far they only can cheat big time in the urban areas...which will help them with the senate. But they can’t win the house only stealing the Urban areas.
Interesting, but it only has to trade above 19 cents +commission to be profitable. That would take quite a high vix but it doesn’t have to get all the way to 150.
Remember This date,,,1/12/2023
Seems to me like a hedge bet. Taking a position that if the Pubbies do not take control of Congress in November that we will be totally screwed.
They are going to get burned. A massive rally is in store.
Manipulated markets always do. We are so being played right now.
“Remember This date,,,1/12/2023”
If Kamala doesn’t become President until Jan 21, 2023, she could theoretically be President for 10 years.
I’m certainly no expert in options trading, but am I reading this right that the total investment is 50,000 X 19 cents = $9,500? If so, hardly a significant investment for anyone, and certainly not any indicator that some shadowy ultra wealthy investor knows something dire is coming. Sounds more like throwing some pocket change at a high risk/high reward Hail Mary just for the heck of it.
I believe large money-makers were pushing the small investors out of the market this morning only to start buying in large blocks soon afterwards. I suspect a lot of people’s stop-loss orders were triggered as the market tanked pre-open only for them to run it up immediately afterwards. Today’s trading was not natural.
I said, “tongue in cheek” earlier today that the large funds were celebrating because all the money was finally being sucked out of the middle-class and back into their pockets where (they think) it belongs. After watching what the markets did today, I’m thinking I may be on to something.
Lot of global indicators....going well past the VP question. Various Chinese banks are in deep trouble. European slow-down in production because of the natural gas crisis. Real estate bubble brewing again. Over past month, indicators in the US of people spending less money. Mid-east producing less oil.
Arggh
“Remember This date,,,1/12/2023”
_____
bkmk!
Something was way too strange about the economic news and today’s trading.
Weren’t there some odd trading patterns during the Trump Presidency? Actions that seemed designed to cause wide swings in currency values right before elections? Maybe I’m misremembering.
Soros maneuver
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