September is historically a weak month for the S&P 500, which has averaged a negative growth of 0.8% since World War II and even 2.3% in the past decade.
This decline, often attributed to capital rotation and heightened volatility as traders return to the market, is known as the September Effect.
However, while many traders anticipate challenges in September, others see opportunities. As previously reported by Finbold, one or more traders placed 350,000 contracts of VIX 22/30 call spreads that expire on September 18 for $0.25 each.
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After the stock market experienced quite a volatile session on September 3, when it erased over $1 trillion in a day, the mysterious investor has seemingly already taken profits.
How much did the trader earn from his stock market crash bet?
Assuming the $9 million bet was placed by a single trader, the $22 calls increased by 211%, and the $30 calls rose by 160%. This allowed the trader to close their position with a profit of over $10 million, according to a post by stock market data tracker Unusual Whales on X (formerly Twitter) on September 4.
The trader’s multimillion-dollar profit is due to a 52.32% spike in the volatility index (VIX) from August 30 to September 4.
This index measures the volatility of stocks comprising the S&P 500 index options, reflecting expected price fluctuations over a short period.
It remains to be seen whether the trader has fully realized their profit, as upcoming employment data could lead to further market volatility.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
