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Trader Spends $13 Million Betting VIX Index Will Surge 56%

A trader paid almost $13 million to buy call options that pay off if the Chicago Board Options Exchange Volatility Index rises at least 56 percent in the next four months.

The person used a strategy known as a call spread, designed for bets that a security will trade within a certain range. About 150,000 bullish contracts on the VIX expiring in September with a strike price of 19 were bought, according to an e-mailed note from Lake Hill Capital Management LLC, which specializes in derivatives trading and research. The cost was offset by selling the same amount of Sept. 28 calls.