The Volatility Buyer Known as '50 Cent' Just Had a Huge Payday

[ajacobson]

He’s been patiently waiting for the VIX to explode, and now that it has, his calls will get rolled on.

The mysterious volatility buyer or buyers dubbed “50 Cent” because of their propensity for buying large blocks of VIX call options priced at roughly a half-dollar each, had their best day of 2017 on Wednesday. The CBOE Volatility Index, commonly known as the VIX or fear index, surged by nearly five points on Wednesday to 15.59, its biggest jump since Sept. 9.

Pravit Chintawongvanich, head derivatives strategist at Macro Risk Advisors, estimates that Fiddy’s profit and loss statement showed a gain of roughly $27 million for the session. The options serve as a hedge against a stock selloff.

https://www.bloomberg.com/news/arti...artying-like-it-s-your-birthday-as-vix-spikes

 

[lawrence-lugar]

Yesterday was a unique and beautiful day for trading...one of those volatile once in a blue moon trading sessions,

Of course everything is crystal clear in hindsight, when reviewing the day's session after the market has closed
In a perfect storm scenario, you would have gone all in...and have a week or two like this...and you could retire happily and comfortably.

 

[Martinghoul]

I don't get this...

How can this possibly be a "huge payday? Firstly, it's a hedge for an equity portfolio, so the PNL will depend on how much was lost there. Secondly, hasn't the guy spent $90mm in total premium on these options? Does making 27 bucks on the day make the 90 disappear?

Seriously, these articles really are smth else.

 

[ironchef]

I don't get this...

How can this possibly be a "huge payday? Firstly, it's a hedge for an equity portfolio, so the PNL will depend on how much was lost there. Secondly, hasn't the guy spent $90mm in total premium on these options? Does making 27 bucks on the day make the 90 disappear?

Seriously, these articles really are smth else.

Maybe you understood the article better. I thought if they liquidated their position, their net profit would have been $27M. It looked to me they rolled it out and up, so they booked that profits but also created some further out and cheaper calls betting on further profits down the line?

 

[newwurldmn]

I don't get this...

How can this possibly be a "huge payday? Firstly, it's a hedge for an equity portfolio, so the PNL will depend on how much was lost there. Secondly, hasn't the guy spent $90mm in total premium on these options? Does making 27 bucks on the day make the 90 disappear?

Seriously, these articles really are smth else.

Those 90mm were a hedge. This 27mm is alpha!

 

[Martinghoul]

Maybe you understood the article better. I thought if they liquidated their position, their net profit would have been $27M. It looked to me they rolled it out and up, so they booked that profits but also created some further out and cheaper calls betting on further profits down the line?

If only it were that easy to make money, we'd all be doing it...

Look, as of the end of Jan, Fitty apparently spent at least $33 bucks of premium (see here). All those options have obviously expired worthless already. His cumulative PNL can't be up $27 bucks, given the move in VIX and the total premium spent. That was PNL on the day, as the newer article stated.

To be sure, the guy is, apparently, running $20bn, so if he's just been long Spooz with the lot, unlevered, he's made, what, arnd $1.2bn YTD. Not too shabby, even if you pay $100 bucks or whatever for this "hedge". Of course, if he did that his PNL yesterday would have been down arnd $346 bucks, w/o the hedges, and $329 with. I mean I just dunno how any of this is cause to celebrate or whatever.

It's just dumb reporting or to borrow a fashionable term...

FAKE NEWS!

 

[lawrence-lugar]

I mean I just dunno how any of this is cause to celebrate or whatever

It's just dumb reporting or to borrow a fashionable term...
FAKE NEWS!

I agree,
All news is fake news -- or they just simply report the sexy/glamorized tidbit...while not covering the entire, overall story

Big money, or so-called smart money, or fund money...usually never make money on options -- they just simply buy them as a small hedge, or insurance, to their bigger picture of the money they are managing.

The only people making money with options are the relatively few, smaller, retail cowboy guys who want to try their hand at luck or skill trading or predicting.
This is where the real money is though -- if you're able to execute and pull it off.

90% of options expire worthless...so all those sellers are happily collecting their premiums.
The safer and slower route.

 

[ironchef]

If only it were that easy to make money, we'd all be doing it...

Look, as of the end of Jan, Fitty apparently spent at least $33 bucks of premium (see here). All those options have obviously expired worthless already. His cumulative PNL can't be up $27 bucks, given the move in VIX and the total premium spent. That was PNL on the day, as the newer article stated.

To be sure, the guy is, apparently, running $20bn, so if he's just been long Spooz with the lot, unlevered, he's made, what, arnd $1.2bn YTD. Not too shabby, even if you pay $100 bucks or whatever for this "hedge". Of course, if he did that his PNL yesterday would have been down arnd $346 bucks, w/o the hedges, and $329 with. I mean I just dunno how any of this is cause to celebrate or whatever.

It's just dumb reporting or to borrow a fashionable term...

FAKE NEWS!

I see. Thank you for your reply, as always.

Regards,

 

[sle]

Big money, or so-called smart money, or fund money...usually never make money on options -- they just simply buy them as a small hedge, or insurance, to their bigger picture of the money they are managing.

You do realize that there is a whole class of hedge funds called "volatility arbitrage funds", right?

There used to be a guy at PIMCO who would sell 10y note strangles in clips of 10k. That's true retail size.

 

[JackRab]

That spike was in the spot VIX... which month did he have his calls and when did he buy them? Because the futures didn't spike that much... and are roughly at mid-april levels... from 12 to 14...

So that 'huge' payday... I doubt it...

Media with their so-called 'experts'... idiots...