(Bloomberg) — Uncertainty about the upcoming jobs report pushed the Cboe Volatility Index, or VIX, to close above 30 on Thursday. And someone is wagering that it won’t stop there.
Shortly before the market closed, a trader bet that the VIX could increase to 150 by late March. Through a series of block trades, the trader — most likely one person, according to market participants — bought 50,000 call options, paying $950,000. It was the most-active VIX options contract Thursday.
“It may be seen as a cheap way to hedge if we see another significant crash,” said Michael Beth, director of trading at WallachBeth Capital. “While the contract has low delta now, if things move quickly, we can see the value of the contract significantly increase.”
This kind of massive activity in contracts that are so far from being profitable is rare. In such an uncertain environment, traders tend to stick to short-dated options that aren’t too far from being in-the-money. The highest the VIX has ever traded on an intraday basis was 89.53 on Oct. 24, 2008, according to Bloomberg data going back to 1990.
Between now and March 22 when the contracts expire, investors face a slew of potentially market-moving events, like four interest-rate announcements and six inflation prints. The buyer of the contracts could be in a situation where he needs to have a hedge that can serve as protection in a panic scenario, should one occur, according to Chris Murphy, co-head of derivatives strategy at Susquehanna International Group.
“This tail hedge doesn’t need the VIX to actually get close to 150,” Murphy said. “But if VIX and VVIX both spike, the value of these calls could grow five-10 fold just due to the Vega.”
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
(Bloomberg) — Federal Reserve Governor Christopher Waller said the US central bank needs to continue to raise interest rates into early 2023 and keep the battle over inflation a top priority despite roiled financial markets.“The focus of monetary policy needs to be fighting inflation,” Waller said in prepared remarks Thursday at the University of Kentucky in Lexington. “We have tools in place to address any financial stability concerns and should not be looking to monetary policy for this purpo
(Bloomberg) — The fast money refused to join the crowd betting the Federal Reserve is about to make a friendly shift in monetary policy. Or at least not before Friday’s jobs report. As stocks were staging the biggest two-day rally since 2020 earlier this week, hedge funds that make both bullish and bearish equity wagers reduced holdings on both the long and short side of their books, according to data compiled by JPMorgan Chase & Co.’s prime broker unit. “We’ve generally seen reticence to add r
Treasury bills are short-term U.S. government securities with maturities ranging from a few days to 52 weeks. Bills are sold at a discount from their face value. A Treasury note is a U.S. government debt security with a fixed interest rate and maturity between two and 10 years. Alexander Morris, F/m Investment’s president, CIO and co-creator of the U.S. Benchmark Series, said that his organization believes that “the U.S. Benchmark Series will revolutionize the financial markets, making the most
TOKYO (Reuters) -Japan’s foreign reserves fell by a record $54 billion in September, official data showed on Friday, as global market ructions dented the value of foreign bonds and prompted dollar-selling intervention to arrest a steep decline in the yen. The data on Japan’s foreign reserves, the world’s second largest in size after China, came a week after separate MOF figures showed Tokyo spent up to a record 2.8 trillion yen ($19.32 billion) intervening in the market last month. Markets have been speculating that Tokyo had sold U.S. Treasuries in conducting the dollar-selling intervention after the yen’s precipitous drop to 24-year lows against the greenback.
(Bloomberg) — Technology stocks are facing more pain after chipmaker Advanced Micro Devices Inc. revived fears about the upcoming earnings season after warning that third-quarter sales were softer than expected.AMD blamed disappointing preliminary results on weakness in the personal computer market, sending its shares and those of other companies involved in the sector lower in postmarket trading. AMD, Nvidia Corp., Intel Corp. and Microchip Technology Inc. were among chipmakers down more than
The chip maker warned that revenue for the third quarter would be lower than expected. CEO Lisa Su said that the PC market has “weakened significantly.”
‘Take Opportunities on Days Like Today’: Mary Callahan Erdoes Says Now Could Be the Best Time to Invest. Here Are 3 Stocks to Consider
Investors are facing a storm of headwinds right now – a genuine bear market, stubbornly high inflation, rising interest rates, and increased fears of a recession in the near-term. However, Mary Callahan Erdoes, CEO of JPMorgan’s Asset & Wealth Management division, advises investors to stay invested. “It’s actually the easiest time in the world to find alpha — there is alpha everywhere… It’s everywhere, because we are in such a state of change… While all the world is focused on all the black
Smart investors know that when a solid company is out of favor with Wall Street and its stock has been beaten down, it’s usually just a matter of time before the stock rebounds and the shares begin to sell in more of their usual range. When REITs are out of favor, their usual 4% or 5% dividend yield can soar to above-average percentages. It takes courage to buy them at these times, but the rewards can be substantial if appreciation occurs, along with the huge dividend yields locked in for the lo
(Bloomberg) — Pension funds are selling billions of pounds worth of assets to rebuild their cash buffers before the Bank of England removes critical market support next week that it introduced to prevent the collapse of the UK’s government bond market.Individual pension funds are each selling tens or hundreds of millions of pounds of liquid assets to boost their reserves, according to pension consultants with knowledge of the transactions, who asked not to be identified discussing their clients
(Bloomberg) — Sign up for our Middle East newsletter and follow us @middleeast for news on the region.Most Read from BloombergTrump Says US Agency Packed Top-Secret Documents. These Emails Suggest Otherwise.Nord Stream Leaks Caused by Detonations in Sign of SabotageSecretive Chip Startup May Help Huawei Circumvent US SanctionsKremlin Lets State Media Tell Some Truths About Putin’s Stalling WarStocks Slide for Second Day Ahead of Jobs Report: Markets WrapSaudi Arabia kept oil prices for its main
(Bloomberg) — America’s top meat company is following in the footsteps of hedge fund Citadel and Boeing Inc. with plans to move white-collar workers out of the Chicago area.Most Read from BloombergTrump Says US Agency Packed Top-Secret Documents. These Emails Suggest Otherwise.Musk Revives $44 Billion Twitter Bid, Aiming to Avoid TrialMar-a-Lago Documents Included Pardons, Emails, Legal BillsSecretive Chip Startup May Help Huawei Circumvent US SanctionsStocks Take Breather After Furious Rally F
These are the marijuana stocks with the best value, fastest growth, and best performance for October 2022.
Crispin Odey Scored a Whopping 193% Return This Year; Here Are 2 Stocks That the Hedge Fund Tycoon Likes
Most people might not want to glance too often at their stock portfolio in 2022, but not everyone has had a rough year. Making good use of the UK market unrest, Crispin Odey’s hedge fund has had a great one. In fact, with returns of a hefty 193% year-to-date, it has been a record year for the fund. How did the hedge fund tycoon do it? To a large extent, by going short against UK bonds and the British pound, a wise moving considering the pound plummeted even further in September after new Prime M
Levi Strauss, AMD and Tilray are among the top trending stocks in after hours trading on Thursday, October 6, 2022.
Enphase Energy ENPH is an energy technology company that develops and manufactures solar micro-inverters, battery energy storage, and electric vehicle (EV) charging stations primarily for residential customers. In the daily Japanese candlestick chart of ENPH, below, we see a weak picture.