A mystery trader known to derivative traders and analysts as “50 Cent”, first identified by Macro Risk Advisors, has dropped millions of dollars betting that the markets will go crazy.As Bloomberg’s Luke Kawa reported in January, the trader gets his or her name from their propensity to buy option contracts on CBOE Volatility Index, or VIX, futures that cost 50 cents. This person is targeting options that would profit if the index spikes sharply – something that would follow a big drop in stocks. The VIX is a measure of expectations of volatility in the options market. If traders are nervous, options become more expensive and the VIX rises. That’s why it’s also called the “fear gauge.”



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s