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February 5, 2018 | Volatility Spikes, Equities Smashed: Congratulations Mr. 50-Cent VIX

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
A trader dubbed “Mr. 50-cent VIX” because he likes to buy masses of options priced near 50 cents, hit it big today.

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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February 5th, 2018

Posted In: Mish Talk

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