VIX Options - The need to know before you trade.

optionsguy posted on 09/09/12 at 10:14 PM

TradeKing Senior Options Analyst, Brian Overby, provides some tips if you are thinking about trading VIX options in September and October.

Hello Traders,

With the CBOE Volatility Index (VIX) trading last week near its 52 week low of 13.30 the option contracts that trade on the index have been getting a lot of attention. September and October historically have been the most volatile months for many of the past trading years. With that being true we we continue to see VIX trade in the low end of its yearly range. Throughout my many years of blogging I have written a plethora of blogs on the terms and conditions of the options that trade on the Index. In all of them I mention that VIX options are not your normal option contract. To name a few of the nuances, the monthly contracts usually stop trading on a Tuesday instead of a Friday and the VIX future contracts that trade alongside the VIX index play a big role in the pricing of the actual option contracts.

Below I have put together a “must read/watch” list of written and video blogs for the beginning VIX option trader.

1) VIX Options and Expiration

2) Are there really VIX options?

3) Where’s the VIX future again?

4) VIX Options - How to Video

5) Introducing the VIX of the VIX


Option contracts on the VIX are definitely not your father’s option contract. Trading them without studying up all the nuances is a recipe for disaster.


Regards,

Brian Overby

TradeKing Options Guy and Senior Option Analyst www.tradeking.com

Follow Brian on Twitter or visit TradeKing on Facebook and YouTube.

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While implied volatility represents the consensus of the marketplace as to the future level of stock price volatility or probability of reaching a specific price point there is no guarantee that this forecast will be correct.

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Posted by optionsguy on 09/09/12 at 10:14 PM

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