$VIX calls triple

Bullish bets on the CBOE Volatility Index have tripled today, turning big gains for option traders for the second time in under one month.

On Feb. 12, Market Rebellion’s Unusual Avtivity tracking systems cited the purchase of 100,000 18March 24 calls for $0.49 with the underlying at 14.49. There was an outstanding open interest of just 42,612 contracts before the trade, indicating that this was a new position.

Those calls traded for as much as $1.65  today, more than triple their purchase price. The underlying rose 81.85% in the same time period, underscoring how options can far outperform their underlying asset.

It is the second winning trade in the CBOE Volatility Index to be posted on Market Rebellion in the past month.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

The VIX spiked higher today to a mid-session high of 26.35 but has since edged lower, last up by 42.10% to 24.27. The index, which does not have a dollar value and trades inversely to the S&P 500, has spiked as equities decline.