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Mark Cuban: 'There was blood in the street' — here's the way I'm hedging the market swings

Matthew J. Belvedere

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.