Brocker.Org: Mystery trader ’50 Cent’ has been unmasked

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“50
Cent” Jackson attends BGC Partners’ 10th Annual Global Charity
Day.

PR Newswire

The volatility market’s greatest mystery has been solved at long
last.

The identity of “50 Cent,” the investor who earned the
nickname by buying gobs of volatility contracts costing roughly
that much, has been revealed.

Turns out it’s Ruffer LLP,
a $20 billion investment fund based in London whose client roster
includes the Church of England. The fund was co-founded by
Jonathan
Ruffer
.

Financial Times reporters Joe Rennison, Christian
Pfrang and Miles Johnson were the ones to
blow the lid off the case
, citing four people from
trading departments at banks who are familiar with the
trades.

Ruffer’s investment vehicle of choice has been
the 
CBOE Volatility Index, or VIX, a measure of
expected price swings in US equities that serves as a
barometer for investor nervousness. It generally climbs as stocks
fall, so purchases of VIX contracts translate to bearish wagers
on the S&P 500.

As of earlier this week, Ruffer had spent $119 million this
year betting on a stock market shock,
$89 million of which had expired worthless
, according to data
compiled by Macro
Risk Advisors
. The investor has gradually amassed holdings of
about 1 million VIX calls through three occasions so far in 2017,
and each time a significant portion expired at a loss.

Blame a subdued VIX for the
futility. 

The fear gauge was locked in a range
between 10 and 14 for the first three months of 2017, and while
it’s since climbed as high as 15.96, it’s been stuck well below
14 since a single-day plunge of 26% nine days ago. Earlier
this week, the index closed at the lowest level since February
2007.

But that doesn’t mean Ruffer is giving up. Already loaded
up on May contracts, the firm has continued to buy cheap VIX
calls expiring later in the year — wagers costing about 50
cents.

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