The mysterious trader known as '50 Cent' finally cashed in when the stock market went crazy
- 50 Cent's recent windfall was a long time in the making, considering the trader for months made bite-sized bets that expired worthless.
- The investor's mark-to-market profit finally surged into positive territory when the Cboe Volatility Index (VIX) more than doubled amid a massive US stock market selloff last week.
It was a long time coming, but the mysterious investor known as "50 Cent" was finally rewarded for his dogged insistence that the stock market would go completely haywire.
50 Cent's moment of truth came last week, when the Cboe Volatility Index (VIX) more than doubled in a single day, en route to a 68% weekly gain. Known for his consistent purchases of bite-sized VIX options - usually costing around 50 cents - the trader was positioned to profit from the spike.
That massive surge in price swings was, of course, a reflection of equity turbulence that saw all major US indexes slip more than 10% from recent highs into correction territory last week. Since the VIX generally climbs as stocks fall, the selloff manifested itself as a sharp volatility increase.
50 Cent has now made more than $183 million from his volatility trading activity on a mark-to-market basis, according to data compiled by Macro Risk Advisors (MRA). That's a major reversal from mid-December, when the trader was sitting on a cumulative loss of $197 million, and means the trader's total February profit amounts to roughly $400 million.
Here's a look at 50 Cent's cumulative profit-loss figure since the start of 2017:
MRA does note that 50 Cent's volatility trading activity is likely some sort of broader portfolio hedge. By their calculation, the size of the trader's actual market position is likely around $20 billion, assuming that the hedging premium paid represents 1% of total assets.
So with all of that established, who exactly is 50 Cent? The mystery behind the trader's identity raged for months before the Financial Times blew the lid off the case last May, citing four people from trading departments at banks who were familiar with the trades. They found that the volatility bull was none other than Ruffer LLP, a fund whose client roster includes the Church of England.
While there's no way to know for sure if 50 Cent has closed his outstanding positions and taken profit on his trades, it's safe to say that his situation went from dire to downright incredible in the matter of a few days.
Here's the latest, and perhaps last, P&L summary for the infamous volatility vigilante:
