Trading Options On VIX: For Dummies


VIX Options Strategies February 16, / in Mentor Blog, Options Trading Advice / by Mark Fenton The CBOE market volatility Index, also known as the VIX, can be a very rewarding trading vehicle.

This contango can wipe out profits in volatile markets, causing the security to sharply underperform the underlying indicator.

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Sample Strategies Using Options and Futures on Cboe's Volatility Indexes. Below are some examples of hypothetical strategies using options or futures on the Cboe Volatility Index ® (VIX ®). Before investing in VIX options or futures, please read closely the Disclosure* and its links below.

More targeted trading strategies. Hedge the volatility of a stock portfolio to help reduce the risk or increase risk-adjusted returns. VIX Options and Futures give you the opportunity to protect against or capitalize on volatility to stay ahead of where the market is going.

Learn how to use options and futures based on the VIX to turn volatility to your advantage. Now that you're familiar with VIX Options and Futures, see how you can add them to your portfolio with Cboe trading tools. See the most recent market quotes for VIX. And monitor the market from one easy-to-use page with features including a market scanner, most active stocks, options and futures, news and more. Options involve risk and are not suitable for all investors.

Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies are available from your broker or at www.

For related reading, see: Momentum Trading With Discipline. VIX settles into slow-moving but predictable trend action in-between periodic stressors, with price levels stepping up or stepping down slowly over time.

Note how the moving average peaked near 33 during the bear market even though the indicator pushed up to To learn more, read: Short-term traders can lower VIX noise levels and improve intraday interpretation with a bar SMA laid on top of the minute indicator.

Note how the moving average grinds higher and lower in a smooth wave pattern that reduces odds for false signals. The price line can also be used as a trigger mechanism when it crosses above or below the moving average. Major volatility funds include:. Trading these securities for short-term profits can be a frustrating experience because they contain a structural bias that forces a constant reset to decaying futures premiums.