The Biggest Short: Trader Bets $30K On 1,100% VIX Spike By February 2024

So far, 2023 has seen an equity bull market with low volatility, but whispers on Wall Street suggest an audacious move that could rival Michael Burry’s famous “Big Short.”

In a jaw-dropping play, a trader recently shelled out $30,000 on a bet that hinges on the VIX index hitting 180 by February 2024.

As of now, the VIX, often dubbed the “fear gauge,” is trading at a mere 15, implying a staggering 1,100% surge would be needed for the bet to pay off.

Yahoo Finance data reveals that the trader purchased 5,035 VIX options with a strike price of 180 and an expiration date of Feb. 14, 2024, at a cost of $0.06 per contract.

This contrarian move raises eyebrows, especially considering that just last week, the VIX index sank to the 13 level, marking one of the lowest points of the year. Currently, it’s at its weakest level since December 2019, prior to the start of the Covid-19 pandemic.

Even more intriguing, the same trader, or others like them, have accumulated over 20,000 open interest contracts in VIX December options, all with the same strike price.

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Source: Yahoo Finance

Betting On The Biggest Short

The audacity of this trade cannot be overstated. Since the CBOE Volatility Index (VIX) was introduced in 1993, it has never surpassed the 100 level.

To put it in perspective, the VIX index reached an all-time high of 89 during the most dire financial day since 1929 when Lehman Brothers collapsed in September 2008. This is only half of the target set by the trader.

Even during the peak of the Covid-19 pandemic, when the whole world went into lockdown, the VIX only hit 85 on March 18, 2020.

Similarly, when the Chinese stock market experienced a meltdown in August 2015, with the Shanghai stock exchange plunging nearly 9% in a single day, the VIX reached a level of 53, for those considering the possibility of a China-triggered market crash.

Opportunities to Access the VIX Index: For investors looking to gain exposure to the VIX index, there are several ETFs available. These include the ProShares Trust VIX Short-Term Futures ETF VIXY, the ProShares Trust VIX Mid-Term Futures ETF VIXM, and the ProShares Trust Ultra VIX Short-Term Futures ETF UVXY, which offers a leveraged play on the VIX.

Could this bet on the VIX index be the next “Big Short” to watch? Only time will tell, but if this audacious bet succeeds, the trader’s loved one might receive a memorable Valentine’s Day treat.

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