50 Cent Returns to Volatility Trading
Stock market apparitions never get old, and right now the rogue trader on everybody’s lips goes by the moniker, ‘50 Cent.’ He only buys his market instruments at 50 cents apiece, but he buys in volume, and he buys with intent.
Wells Fargo personnel have been tracking this mysterious trader in their downtime, following his every cent and waiting patiently for a visual. The last time he came out to play was in January, amid the aftermath of Trump’s Iranian drone strike.
An order for 73,601 option calls was recorded on the CBOE Volatility Index (VIX), a “fear gauging” index that measures the market’s 30-day implied volatility. 50 Cent made a play on market volatility rising, which soon came to be.
Now, amid the coronavirus chaos, Wells staffer Pravit Chintawongvanich believes ’50 Cent’ is back again. The past two weeks have seen a 100,000 spike of bullish call option purchases on the VIX, and all for 50 cents apiece. These options were considered in-the-money if the VIX rose above 22 by the end of this month, and of course, the coronavirus has taken good care of that. This week’s sell-off has launched the VIX 82%, allowing ‘50 Cent’ to make it out with $7 million in profit.
’50 Cent’ is doing what most investors would call speculative and unsustainable; no one truly being able to predict volatility. However, his record so far is blowing Wall Street away. The trader’s made hundreds of millions. Who is it? Where are they getting their edge? What’s the obsession with 50 cent orders?
That’s the water cooler conversation of the moment. Some are reckoning on accomplices to world leaders, while others are simply assume it’s a lucky fund manager trying to hedge. One thing cannot be denied, however. ’50 Cent’ will probably strike again with mass 50 cent call options on the VIX, and it will be eventful after that!