Volatility Spikes, Equities Smashed: Congratulations Mr. 50-Cent VIX

Mr. 50-cent VIX is likely cashing in today. On January 26, Mr. 50-cent bought 50,000 strike 24 volatility options for 49 cents each. I commented on the trade at the time in Mr. 50-Cent VIX Strikes Again.​

Dow Daily Chart

“Everyone in the Room is Short Volatility”

Volatility was once just a measure. Now it’s an income-generating product. Everyone is selling it says Pennant Capital.

For details on the short volatility madness, please see “Everyone in the Room is Selling Volatility“.

Short volatility traders are getting carted out today. I would not be surprised if a number of hedge funds blew up today with margin calls.

Mike “Mish” Shedlock

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killben
killben
6 years ago

Thanks for the video, Greggg! My vote is for this market is done for without the central banksters, who will soon be landing on the markets soon.

stillCJ
stillCJ
6 years ago

Went down to 5995 and got a dead cat bounce.

stillCJ
stillCJ
6 years ago

Watching Globex Dow Futures jumping around all over. Crazy volitivity.

Greggg
Greggg
6 years ago

From Friday, link to youtube.com

stillCJ
stillCJ
6 years ago

Back to the bitcoin discussion: wow it’s really crashing now, 11;50 pm ny time down to almost $6000.

killben
killben
6 years ago

Kolanovic Admits He Was Wrong, Says Central Banks May Step In To Halt The Crash (link to zerohedge.com) …..The calls for the central banksters have begun… Let us see how long the central banksters stay in hiding. The cowards will start coming out and shooting their mouth off shortly.

SweetKenny
SweetKenny
6 years ago

I commented that in the past on another blog and someone told me to go back to Zerohedge. It’s obvious based on current events that the “deep state” is very political and anti-trump. He is intruding on their gaming of the system – wouldn’t surprise me in the least.

killben
killben
6 years ago

So the market is all about the central banksters. Bullard, where are thou! We want QE4EVER now!!

wootendw
wootendw
6 years ago

The Drude Report (bold, black) headline reads “Fed Wants Blood”. Links to Peter Schiff on the Street link to thestreet.com

Escierto
Escierto
6 years ago

The Plunge Protection Team will be buying with both fists tomorrow. God forbid they let capitalism and markets operate freely!

Hammeringtruth1
Hammeringtruth1
6 years ago

Reminds me of MF Global.

Long VIX
Long VIX
6 years ago

Mish, unfortuantely, for Mr 50 cent the VIX options are European and not American. This means that 1) he can’t exercise them before the expiry and must hope that VIX stays at these levels for at least another month. 2) also, the ASKs and BIDs for VIX options are messed up right now (market is not paying enough to close position for the risk one had to take on); 3) It does not make financial sense to buy PUT option with high strike price and the same expiry to lock in gains, because PUTs are super expensive too.

How do I know. I have small VIX call position too and thought to cash in, but can’t.

tedr01
tedr01
6 years ago

Mish—Where does this leave the average stock marker investor? Time to bail on stocks and head for bonds or precious metals?

Guest 2
Guest 2
6 years ago

Congratulation too (albeit hypothetical) to Mr Warren Buffet for his hypothetical Bitcoin puts. (Don’t today’s sellers realize it uses blockchain technology? LOL 😉 )

Staaycalm
Staaycalm
6 years ago

Finding some interesting reading on the XIV, short volatility, of a termination event after close – down over 80%

caradoc-again
caradoc-again
6 years ago

After hours interesting. What consequence to large institutions that were short VIX? with equity and bond action as it is, gold must surely benefit?

Staaycalm
Staaycalm
6 years ago

Watch that 2630 level on the SPX (100-day). LOB. Congrats to the small minority long volatility. I imagine it feels good to be on the profitable side of the trade for once.

caradoc-again
caradoc-again
6 years ago

At the very least ease back on the rate of QT.

caradoc-again
caradoc-again
6 years ago

Absolutely. Get the ink ready.

channelstuffing
channelstuffing
6 years ago

gentlemen, start your presses ,10 trillion in liquidity on tap.powell is trump’s boy and trump wants moar QE/NIRP

caradoc-again
caradoc-again
6 years ago

READ, money trends tightening link to moneymovesmarkets.com

shamrock
shamrock
6 years ago

Trump’s last claim to success is looking shaky.

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