Home » Large investors castling on the VIX fear index, a clue as to what to expect in the coming months

Large investors castling on the VIX fear index, a clue as to what to expect in the coming months

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Large investors castling on the VIX fear index, a clue as to what to expect in the coming months

Curated by Silvia Vianello

Most people are NOT really realizing the devastating implications we are experiencing from inflation and wars.

But while most people are SLEEPING, the largest investors in the world are already running for cover by taking full swing positions to hedge against market risk.

Uncertainty over the employment report prompted the Cboe Volatility Index, or VIX, that is the index of fear, to close above 30 last Thursday. And someone is convinced that it will not stop there. Indeed, it will gallop higher and higher in the coming months.

On Thursday there are those who paid $ 950,000, yes you got it right $ 950,000 to buy 50,000 options to earn on VIX peak by March, with peaks of the VIX that could reach 140 by the end of March. In other words, if they were right to understand each other, the S & P500 could go down to 2,000. It is not known whether a person or an investment fund has bought 50,000 call options on various strikes.

Some see the VIX as “a cheap way to protect yourself” from a devastating market crash.

No such data has been seen on Vix trading since 1990.

Between now and March 22, when contracts expire, investors are faced with a series of events that could bring the market down, such as four interest rate announcements and six inflation results. The buyer of the contracts may find themselves in a situation where they need to have one cover that can act as protection in a panic scenarioshould it occur.

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As an investor you need to be ready by knowing at least one strategy to make money when the markets go down. You got it?

Think about it because those there who opened those positions are the smartest ones in the world and who often know something you don’t know. To understand each other, a similar thing (albeit minor) was seen at the end of November 2019 and then we all know how it ended between February and March 2020, was it a coincidence?

(Data Source: Bloomberg, reworked by the mytradingway team)

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