Vix call option symbol

By: Andryshka Date: 05.07.2017

Trading volatility is nothing new for option traders.

Most option traders rely heavily on volatility information to choose their trades. For this reason, the Chicago Board Options Exchange CBOE Volatility Index , more commonly known by its ticker symbol VIX, has been a popular trading tool for option and equity traders since its introduction in Until recently, traders used regular equity or index options to trade volatility, but many quickly realized that this was not the best method. In this article, we take a look at the past performance of the VIX and discuss the advantages offered by the VIX options.

Determining Market Direction With VIX What Is the VIX? VIX options give traders a way to trade volatility without having to factor in the price changes of the underlying instrument, dividends, interest rates or time to expiration - factors that affect volatility trades using regular equity or index options. VIX options allow traders to focus almost exclusively on trading volatility.

Diversification Traders have found the VIX very useful in trading, but now it provides superb opportunities for both hedging and speculation. It may also be an excellent tool in the quest for portfolio diversification. Diversification, which most people consider a good thing, is useful only if the instruments used are not correlated. In other words, if you own 10 stocks and they tend to move together, then you really aren't diversified at all.

VIX Options

For further reading, see Introduction To Diversification and The Importance Of Diversification. On average, VIX has risen This makes it an excellent diversification tool and perhaps the best market disaster insurance.

The chart in Figure 1 shows how the VIX moves in opposition to the SPX in big moves down in the SPX.

In , the VIX reached its highest close at Speculation As you can see in Figure 1, the VIX trades within a given range. It bottoms out around 10, because if it were to go to zero, that would mean that the expectation was for no daily movement in the SPX. On the other hand, the VIX has spiked upward to around 80 when the SPX has dropped, but for the VIX to stay there would mean that the market expectation was for very large changes over an extended time frame.

This makes the new VIX options excellent speculation instruments as well. Similarly, buying puts or bear put spreads , or selling bear call spreads can help a trader capitalize on moves in the other direction.

Another factor enhancing the effectiveness of VIX options for speculators is their volatility. However, this is still higher than most stock options out there. An instrument that trades within a range, cannot go to zero and has high volatility, can provide outstanding trading opportunities.

VIX Facts Unlike standard equity options, which expire on the third Friday of every month, VIX options expire on one Wednesday every month; there is no question that these options are being used, thus providing good liquidity. According to the CBOE's website, when VIX options were launched in , CBOE set a new single-day trading record in options on the VIX on March 29, , when 31, contracts traded.

For all of March - the first full month of trading for VIX options - total volume was , contracts, with an average daily volume of 7, At the end of March, open interest already stood at a very healthy , contracts.

vix call option symbol

In February of , the volume for options averaged above , The Bottom Line All of this means that option traders now have a new instrument to add to their trading arsenal, one that isolates volatility, trades in a range, has high volatility of its own and cannot go to zero.

For those who are new to option trading, the VIX options are even more exciting. Most people who focus on volatility trading are both buying and selling options, but new traders will often find that their brokerage firms do not allow them to sell options. By buying VIX calls or puts or spreads , new traders can now have access to volatility trades.

For further reading, see Volatility - The Birth Of A New Asset Class , and Volatility Index Uncovers Market Bottoms. Dictionary Term Of The Day. A measure of what it costs an investment company to operate a mutual fund. Latest Videos PeerStreet Offers New Way to Bet on Housing New to Buying Bitcoin? This Mistake Could Cost You Guides Stock Basics Economics Basics Options Basics Exam Prep Series 7 Exam CFA Level 1 Series 65 Exam.

Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. Introducing The VIX Options By Chris McKhann Share. Figure 1 Speculation As you can see in Figure 1, the VIX trades within a given range. Learn the best ways to profit and hedge using the Chicago Board Options Exchange Market Volatility Index.

Discover how the VIX Index, or "fear gauge," began above the historical mean, and learn how this relates to past spikes in volatility. The CBOE's volatility index is a helpful market indicator. Learn how it can gauge the mood of the stock market.

VIX Options

VIX can gauge when the market has hit bottom - a welcome sign of better things to come. The VIX has spawned a giant trading ecosystem that may lead to major losses when turbulence hits.

iPath S&P VIX Short Term Futures ETN (VXX) Option Chain - Stock Puts & Calls - omenejomy.web.fc2.com

Volatility funds offer exposure to high greed and fear levels while avoiding predictions on price direction. The VIX, commonly known as the "fear index" and charting market volatility, has increased dramatically, but the market hasn't moved much. Find out why investors and analysts use the Chicago Board Options Exchange Volatility Index, or VIX, to measure the market's Learn about different hedging strategies to reduce portfolio volatility and risk, including diversification, index options Learn what the relationship is between implied volatility and the volatility skew, and see how implied volatility impacts Learn the most commonly used technical indicators of stock market volatility that are watched by stock market traders and An expense ratio is determined through an annual A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies.

A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all A legal agreement created by the courts between two parties who did not have a previous obligation to each other.

Episode 116: How the Chicago Board Option Exchange (CBOE) Volatility Index (VIX) Works

A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. A statistical technique used to measure and quantify the level of financial risk within a firm or investment portfolio over No thanks, I prefer not making money.

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vix call option symbol

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