Mystery Trader Makes Over $10 Million After Betting on September Volatility Rise

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As a seasoned analyst with over two decades of market experience under my belt, I must say that the recent events in the financial world have been quite intriguing. The mysterious trader who cashed in big on volatility during the September sell-off is a testament to the adage ‘buy low, sell high.’

As a researcher, I find myself reflecting on September’s historical tendency towards market weakness. True to form this year, equities have experienced significant losses, with over $1 trillion in total market capitalization disappearing during a single trading session. Yet, amidst the turbulence, one clever trader stands out, having profited an estimated $10 million by successfully predicting and capitalizing on the rise in market volatility.

As a crypto investor, I came across a post on X – formerly known as Twitter – by Unusual Whales, suggesting that an enigmatic investor who wagered on the CBOE Volatility Index (VIX) could have pocketed roughly $10 million from the recent sell-off.

Although the specifics of the trade were somewhat unclear, the news source pointed out that the buyer’s acquisition of 350,000 VIX 22/30 call spread contracts expiring on September 18 for $0.25 experienced a significant increase. The 22/30 call spreads rose by 211% and 160%, respectively, resulting in a substantial profit.

On Friday, there was a lot of discussion about a contract worth approximately 350,000 units for the symbol VIX, which was bought for a total of $9 million. However, something most people aren’t aware of is that they might have closed their position today – you can use Unusual Whales to confirm this more easily by checking out the images!

— unusual_whales (@unusual_whales) September 3, 2024

As an analyst, I observed my gains stemming from events unfolding at the end of September. The volatility index (VIX) experienced a dramatic increase exceeding 50%, coinciding with a broad sell-off in the stock market. This downturn was particularly pronounced among large-cap tech stocks, including Nvidia (NVDA), a company that had been thriving on AI growth bets. In this context, NVDA witnessed a significant loss of approximately $360 billion in market capitalization, taking into account its after-hours trading as well.

In addition to Nvidia experiencing a slowdown in growth, two manufacturing indicators have consistently shown sluggish activity within the affected sector due to high interest rates. This week, the August jobs report from the U.S. is set for release and could cause additional market fluctuations, as last month’s unexpectedly high unemployment figure resulted in a stock market decline.

It’s worth mentioning that based on data from Investopedia, September is the unique calendar month that has shown a tendency over the past 98 years to have negative returns in the stock market. This phenomenon is called the “September Effect,” and it refers to the period when the market tends to underperform during this month.

Research by CCData indicates that the so-called September Effect extends into the cryptocurrency market as well. Specifically, the average return for Bitcoin from September months between 2010 and 2023 has been a decrease of around 4.5%.

This week’s Featured Graph illustrates our examination of Bitcoin’s progression from September 2010 up until 2023.

— CCData (@CCData_io) September 3, 2024

For a span of 13 years, Bitcoin’s price increase in September has been positive just 6 out of those years. On the other hand, April, November, and October have delivered average gains of approximately 35.6%, 39.2%, and 28.7% respectively.

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2024-09-06 03:35