Almost $100 Million of VIX Options Traded Hands in a Split Second Today
By Callie Bost
Almost $100 million worth of options pegged to volatility in U.S. equities changed hands in a split second today in Chicago, transactions that together would represent more than half a normal day?s volume.
About 40 different trades went off at 12:16:04 p.m., encompassing contracts that gain in value should the Chicago Board Options Exchange Volatility Index rise over the next few months, according to options data compiled by Bloomberg. The four biggest were each more than 130,000 contracts.
While divining the motive of a single trader who may be operating in more than one market is impossible, buying a call on the VIX is a bet the equity market turbulence will rise, which usually happens when stocks fall. To Jamie Tyrrell, a VIX specialist on the CBOE floor, the trades had characteristics of someone hedging stocks.
?I?m not sure if it?s the biggest trade ever, but it?s certainly one of them,? said Tyrrell, who works for Group One Trading LP, the primary market maker for VIX options. ?Someone is interested in owning a lot of protection, but not in the near-term.?