Tag Archives: options trading

dollar gains

Investors Wage Mammoth Trades on VIX and SPX

The Chicago Board Options Exchange Volatility Index (VIX) has just received a $13 million investment from a single investor in call options forecasting that the gauge will jump 88 percent by the first quarter next year.

According to Trade Alert LLC, an unnamed investor bought approximately 100,000 VIX March calls, placing the contracts on the top-five list of most-traded U.S. options exchanges.

But the VIX is not the only index to draw big money these days. A different investor has put $5.1 million on the line anticipating an increase in the Standard & Poor’s 500 Index (SPX) greater than 10 percent in the coming three months. Trade Alert reports that this trade comprises about 31,000 calls with a February expiry bought at around $1.65 per contract and bearing an exercise price of 1,975 on the U.S. equity benchmark.

Besides the astronomical amounts invested in them, the trades have also piqued the market’s interest on account of their different perspectives: the VIX trade hinges on the emergence of a highly volatile market, while the SPX trade needs significant gains in the equity market. Both trades, moreover, defy the popular prospect of a continued U.S. monetary stimulus following a bull market of four years.

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