Giant VIX options block-trades

D

Dmitrij_111

Somebody shook up options screens Thursday morning with a wager that the VIX Index will rise toward 40 -- and won’t be lower than 25 -- in July, up from about the 17 level where the volatility gauge currently trades. The trader appears to have made several block trades, buying a total of about 200,000 call contracts. That’s almost as big as the total daily volume of VIX calls, based on the 20-day average, data compiled by Bloomberg show.

The trader likely made the purchase through several tranches, first buying 100,000 contracts in two block trades, then coming back for 100,000 more. They paid $3.40 for calls at 25 and received $1.30 for selling 40 calls.

Are we about to see increased volatility after June FOMC? Thoughts, guys?
 
Dmitrij_111 said:
Somebody shook up options screens Thursday morning with a wager that the VIX Index will rise toward 40 -- and won’t be lower than 25 -- in July, up from about the 17 level where the volatility gauge currently trades. The trader appears to have made several block trades, buying a total of about 200,000 call contracts. That’s almost as big as the total daily volume of VIX calls, based on the 20-day average, data compiled by Bloomberg show.

The trader likely made the purchase through several tranches, first buying 100,000 contracts in two block trades, then coming back for 100,000 more. They paid $3.40 for calls at 25 and received $1.30 for selling 40 calls.

Are we about to see increased volatility after June FOMC? Thoughts, guys?
More...

Or they just want to hedge their long exposure. Based on the moves in the indexes and VIX, makes more sense to hedge now than it did last Friday.
 
ET180 said:
Or they just want to hedge their long exposure. Based on the moves in the indexes and VIX, makes more sense to hedge now than it did last Friday.
More...
because of low volume and volatility hence hedge became cheaper?
 
I wouldn't read too much into it in terms of a directional trade. Going back to 2017, large VIX opening trades have expired worthless 90% of the time.
 

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Market is way too complacent, if you have huge long positions buying some vix calls would be a great idea.


This always happens after the vix drops and drops and drops. Then out of no where it skyrockets to 25+ and eventually 40+ if fear lasts longer than a week. Of course people will only wish to buy vix calls after the fact the market has fallen, so buying in now might not be such a bad idea.
 
Dmitrij_111 said:
because of low volume and volatility hence hedge became cheaper?
More...

Based on technical, stocks became more overbought. Meanwhile the cost of insurance dropped relative to last week. So it makes more sense to buy protection or hedge now than it did last week.
 
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