The “50 Cent” VIX Buyer Doesn’t Care

There is a fair amount of coverage on “50 Cent” the VIX buyer who is offloading cash into VIX calls (generally priced at 50 cents) to the tune of an estimated $80 million dollars.

You don’t get to be in a place where you can lose that type of premium unless you are smart. I don’t think this guy is just ad-hoc betting on a market collapse. I suspect he’s shorting the heck out of volatility ETP’s (UVXY, VXX, etc) or hedging long positions in XIV, SVXY etc.

One of the things that always pops up are headlines reading “RECORD INFLOWS INTO VOLATILITY ETPS – INVESTORS BETTING ON COLLAPSE”. I have not done the math (yet) but, for a thought exercise:

Could the guy plowing unbelievable amounts of money into VIX options be the on the other side of all the retailers plowing unbelievable amounts of money into volatility ETP’s? I think the liquidity is there to offset $80mm in VIX calls…

VOLATILITY ETP INFLOWS
long volatility ETP’s inflows

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