Billionaire Mark Cuban told CNBC on Tuesday he saw the recent stock market swings as a buying opportunity.
But the owner of the NBA's Dallas Mavericks said on "Fast Money Halftime Report" that he decided to hedge his moves.
"I took a couple occasions to jump in. There was blood in the street with the VIX, and everybody got leveled out of short the VIX," said Cuban, also a "Shank Tank" investor. "So what did I do, I bought puts on the VIX. Not huge positions, but enough to be interesting. I also bought some VIRT, Virtu [Financial], because they do HFT, high-frequency trading. And they make money off volatility."
The most high-profile bet against market volatility that went bust last week was the crash in the VelocityShares Daily Inverse VIX Short-Term exchange-traded note, trading under the symbol XIV and designed to give the opposite return of the VIX. In other words, the XIV was a bet on calm markets. So when things went haywire, those investors got crushed, and Credit Suisse, which issues the XIV, said that trading in it would end later this month.
"If the volatility continues, I have enough of a position there [in Virtu stock] to make some money there. If it doesn't, I'll make money with the VIX puts," Cuban said. Buying a VIX put option is a bet that volatility in the market will decrease.
The VIX, formally called the Cboe Volatility Index, is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. The VIX is sometimes called the "fear gauge."
— Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank," which features Mark Cuban as a panelist.