General Electric: A Fantastic Asset? We have ignored 50 Cent in this column because large options trades are usually tied to larger stock or bond positions.
The story always seemed contrived and reminiscent of tales of another legendary figure who once supposedly prowled the options market: the Sheikh.
In the s, when options traded in open-outcry pits, big trades that were hard to explain were often attributed to the Sheikh.
The story eventually faded away. And so it is that 50 Cent confronts reality.
We are advised that he has bought VIX calls to hedge a multibillion-dollar high-yield bond portfolio. High-yield bonds are the fixed-income equivalent of stocks, so VIX calls are commonly used as hedges.
In comparison, the VIX is more liquid and reactive. Most investors should avoid trading VIX options and focus on how the non-tradable VIX can help determine if the mob is too fearful, marking a potential directional shift in options from 50 stock market.
Those signals often occur after share prices have collapsed and the fear gauge has surged.