• A mystery trader just made millions off the US stock market meltdown.
• The so-called “VIX Elephant” has a wager on a large increase in the CBOE Volatility Index, which serves as the stock market’s “fear gauge”.
• The index soared overnight to a reading of 37, more than doubling.
• The bet is expected to pay out as much as $US262.5 million — if everything goes according to plan.

A mystery trader who has remained steadfast on the view that turbulence is on the way for the US stock market has just made millions of dollars.

The investor, known as “VIX Elephant”, has been clinging on to a wager that the Cboe Volatility Index, or VIX, would climb to levels not seen in the last couple years.

He initiated the bet on July 21 of last year, despite the VIX consistently trading near record lows at a reading of around 10 or below. The wager has even involved four rollovers: September 25, December 1, January 11 and February 2. Joe Ciolli has a detailed breakdown at Business Insider Prime.

But it appears it is paying off in a big way with the VIX spiking at 37 after the Dow Jones recorded its biggest points drop of all time.

It’s a massive comeback for the Elephant, who has now made money, according Macro Risk Advisors.

But the bet is still short of the trade’s full upside potential of $262.5 million, if it all goes to plan. See the breakdown of the trade here.

Read the full story at BI Prime >>

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