Last Thursday’s big selloff in stocks cost a lot of people money, but at least one person walked away smiling.
He raked in a whopping $US21 million in mark-to-market gain as the VIX spiked 44%, its biggest increase since May, according to data compiled by Macro Risk Advisors.
The sharp rise mirrored a 1.5% drop in the S&P 500, which had gone 15 days without a closing move greater than 0.3% in either direction, the longest such streak on record. The two gauges trade in opposite fashion roughly 80% of the time.
This is not to say 50 Cent is rolling in the dough. That prolonged period of calm leading up to Thursday’s fireworks has still drained the volatility enthusiast’s wallet to the tune of a $US150 million loss year-to-date.
So what did 50 Cent do on Thursday, having finally reaped some fruits of his long-volatility labour? He reinvested those profits back into more VIX wagers, of course. He bought 80,000 VIX calls expiring September 28, for 52 cents, MRA data show.
Curious as to who 50 Cent is? Well you’re in luck. Back in May, the Financial Times blew the lid off the case, citing four people from trading departments at banks who were familiar with the trades. They found that the volatility bull is none other than Ruffer LLP, a $US20 billion investment fund based in London whose client roster includes the Church of England. The fund was founded by Jonathan Ruffer.
While the VIX has settled somewhat since Thursday, slightly paring its huge spike, there’s a growing chorus of market experts forecasting more turbulent times ahead. That could mean more lucrative days ahead for 50 Cent — and some ripe opportunities for him to claw back into positive territory for the year.