Learn the trade here. Make it on tradeMONSTER

Options Trading News

May 25, 2012  Fri 2:45 AM CT

VIX: SEE CHART GET CHAIN FIND STRATEGIES
The CBOE Volatility Index options had significant volume yesterday, with a couple of big trades coming after the bell.

The VIX finished the day down 3.54 percent at 21.54. It had been above 23 for much of the afternoon. The options volume was topped by the action in the July and August options, which are priced off their respective futures. The July VIX futures were down 1.5 percent yesterday to close at 25.95, while the August futures fell 1.3 percent to 26.55.

The VIX saw more than 715,000 options change hands, 453,000 of which were calls. This compares to a daily average of 280,000 in the last month.

The two biggest trades went off after the stock market's close, as VIX options trade until 4:15 p.m. ET.

A trader bought 20,000 each of the July 40 and 60 calls for $1.17 and $0.22. At the same time, he or she sold 40,000 July 50 calls for $0.47. About three minutes later, 20,000 each of the August 40 and 60 calls were bought for $1.59 and $0.35 respectively as 40,000 August 50 calls were sold for $0.74.

Although the volume at the 40 strike was less than open interest in both cases, it appears that these are new call butterfly spreads. These spreads are designed to profit from a rise of the corresponding VIX futures to 50 by their expirations.

The amount paid to open the positions was very small, just $0.45 in July and $0.46 in August. The potential gains are more than $9.50 under ideal circumstances but would require the VIX to more than double and stay at that elevated level through expiration. (See our Education section)
Share this article with your friends


Related Stories

VIX

Videocast: VIX pits quiet down

August 29, 2014

Despite persistent geopolitical issues, Group One's Jamie Tyrrell says volatility trading is slow ahead of the three-way weekend.

VIX

VIX above 12 as equities rebound

August 29, 2014

Equity indexes finished yesterday lower but regained much of the ground lost early in the session. The CBOE Volatility Index rose back above the 12 level but was well off its high of the day.

VIX

Videocast: Big buyer in VIX puts

August 28, 2014

As the market cuts its early losses, Group One's Jamie Tyrrell says the big VIX trade of the day is a purchase of September puts.

VIX

S&P 500 ekes out new record high

August 28, 2014

Equity indexes closed almost unchanged on light volume and low volatility yesterday, but the S&P 500 was able to eke out a new closing high.

VIX

Videocast: Low volume in VIX pits

August 27, 2014

Group One's Jamie Tyrrell says volume is low in the VIX pits as one large player appears to done buying upside calls.

Premium Services

Education & Strategy

It's all skewed up

Most new option traders know little about implied volatility, and learn the hard way. Today we want to help you...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER