Who: Ibex Investors
What: Betting on volatility in the markets.
When: February 9, 2018
Why: Record calm stock markets became volatile very fast.
Must represent my city of Denver, Co and spotlight Ibex Investors. The small hedge fund based out of the mile-high city cashed in to the tune of 17.5 million on a 200K bet.
The bet was linked to VIX futures, the exact mechanics were not disclosed. The VIX index or volatility index is often referred to as the “fear gauge”. The index will spike in times of uncertainty or mass change in the market.
The VIX index was extremely stable and low throughout 2017. The bet from the small hedge fund was that the market would receive a spike of volatility in the future.
When markets started to move south with great velocity, relatively speaking to the past couple years, the bet paid off.
Everyone who knew about the trade was giving the firm a hard time. The firm understood the risks and realized that the trade was mispriced and ultimately capitalized.
The best part of the story…in true Colorado fashion they went skiing to celebrate!
I enjoy readings stories like this but am not a big fan of derivatives personally. If you use derivatives as part of your overall strategy share below! Make sure to let us know what positions you are currently holding.
Way to go Ibex Investors!
What Are Your Thoughts?
- Do you swing for the fences with a portion of your portfolio?
- What level of volatility do you predict in the next couple of months?
- What is the biggest profit you have scored on a gut call investment?