50 Cent Trader Back? Mystery Investor Makes Big Bet on Volatility

Someone has purchased 100,000 call contracts, worth $5m, betting that the Cboe Volatility Index will surge to 50 in May. Another purchase at the same strike price and expiry was fired out Wednesday, with 50,000 contracts snapped up at 51 cents apiece for $2.6m in total. The trades have led to speculation that the '50 Cent' trader, who made a name for themselves in the options market, is back with another big bet on stock volatility.

The '50 Cent' trader, known for their large purchases of volatility options at or near 50 cents, has been relatively quiet in recent years. This recent activity has sparked speculation that they are returning to the market, looking to capitalize on a potential increase in volatility.

This move comes after a year where volatility hedging strategies have struggled. The CBOE VIX Tail Hedge Index (VXTH), which measures the performance of a popular volatility call buying strategy, lost 26% in 2022, underperforming the S&P 500's 19% decline. This suggests that investors are now starting to look for opportunities to capitalize on a potential increase in volatility.

The return of the '50 Cent' trader could signal a shift in market sentiment, with investors becoming more concerned about potential downside risk. This could lead to an increase in demand for volatility hedging strategies, which could benefit traders like the '50 Cent' trader who are betting on a surge in volatility.

It remains to be seen if the '50 Cent' trader is indeed behind these recent trades, and if they will be successful in their bet on volatility. However, their return to the market is a significant event that could have a significant impact on the volatility landscape.