Investor Makes Mammoth VIX Bet That Could Pay Out $265 Million

[Chuck Krug]

Investor Makes Mammoth VIX Bet That Could Pay Out $265 Million
Big bet on a powerful resurgence in market turbulence sees ‘fear gauge’ at 25 by October

https://www.wsj.com/articles/invest...bet-that-could-pay-out-265-million-1500917145

 

[Martinghoul]

Just as VIX is well on its way to hit a new all time closing low... If Oct VIX futures end up settling arnd where we are now, this trade will lose arnd $67mio.

 

[Chuck Krug]

I wonder who it is.

 

[TraDaToR]

Just as VIX is well on its way to hit a new all time closing low... If Oct VIX futures end up settling arnd where we are now, this trade will lose arnd $67mio.

1/4 risk/reward... You find it too low?

 

[SteveM]

Heads I lose 1, tails I win 4 is a good trade as far as I am concerned.

 

[algofy]

Heads I lose 1, tails I win 4 is a good trade as far as I am concerned.

I'm not sure it's a 50/50 proposition.

 

[Martinghoul]

1/4 risk/reward... You find it too low?

This trade's risk isn't necessarily limited to the number I've given. Its reward, on the other hand, is capped at the max given in the OP's article.

This is what the payoff looks like at expiry:

 

[newwurldmn]

This trade's risk isn't necessarily limited to the number I've given. Its reward, on the other hand, is capped at the max given in the OP's article.

This is what the payoff looks like at expiry:
View attachment 175984

And you have to be crazy precise to earn that reward. When does the VIX hit 25 and vix vol (and vixset volatililty) remain low?

 

[Martinghoul]

And you have to be crazy precise to earn that reward. When does the VIX hit 25 and vix vol (and vixset volatililty) remain low?

Ye, given the sheer size of this thing, it's baffles me bigly...

 

[newwurldmn]

Ye, given the sheer size of this thing, it's baffles me bigly...

is it possible that the news services got the side wrong? the other side sounds a lot better as a tail hedge.