{"id":57127,"date":"2024-12-09T10:00:00","date_gmt":"2024-12-09T09:00:00","guid":{"rendered":"https:\/\/www.captrader.com\/?post_type=blog&p=57127"},"modified":"2024-12-09T10:18:40","modified_gmt":"2024-12-09T09:18:40","slug":"new-vix-options","status":"publish","type":"blog","link":"https:\/\/www.captrader.com\/en\/blog\/neue-vix-optionen\/","title":{"rendered":"New VIX options available for trading!"},"content":{"rendered":"

What is the VIX index?<\/h2>\n\n\n\n

The VIX, also known as the \"fear index\" or \"fear index\", is the world's best known Volatility index<\/a>. It measures the expected range of fluctuation (volatility) of the US stock market based on the S&P 500. The VIX is developed and published by the Chicago Board Options Exchange (CBOE). The calculation is based on option prices on the S&P 500 with a remaining term of 30 days. A high VIX<\/a>-value often indicates a turbulent or falling market, while a low value often signals a stable, upward market.<\/p>\n\n\n\n

How is the VIX index calculated?
The VIX is based on the prices of options contracts on the S&P 500 index. Both the prices of put and call options are included in the calculation. The index indicates the expected volatility for the next 30 days as a percentage. A higher VIX value signals a greater expected fluctuation range and therefore also increased market uncertainty.<\/p>\n\n\n\n

A frequently quoted mnemonic among traders is: if the S&P 500 rises, volatility (VIX) falls; if the S&P 500 falls, volatility (VIX) rises. Simply put, the VIX indicates the expected intensity of fluctuations in the S&P 500. A rise in prices is often accompanied by a fall in volatility, while volatility typically increases when prices fall.<\/p>\n\n\n\n

Tip: You can find out more about the VIX index in this blog post<\/a> or in this video<\/a>!<\/p>\n\n\n\n

How can the VIX index be traded?<\/h2>\n\n\n\n

The VIX Index <\/a>itself is not directly tradable, but futures and options on the VIX can be traded on the CBOE. In addition, there are numerous ETFs and ETNs that track the VIX and thus offer an indirect way of speculating on the VIX. However, investors should bear in mind that the VIX is not a classic asset like a share or a bond, but entails specific risks and special features.<\/p>\n\n\n\n

Since the VIX index cannot be traded directly, it is crucial for traders and options traders to closely analyze the forward curve of the VIX index. Prices of futures and options are always based on a specific VIX future and never on the VIX index itself.<\/p>\n\n\n\n

The forward structure curve shows the prices of successive futures contracts. The price of a later contract is usually higher than that of the current front contract, which is due to a premium resulting from storage costs, interest rates and forecast uncertainties. This constellation is referred to as \"contango\".<\/p>\n\n\n\n

\"Line<\/figure>\n\n\n\n

Another rather unusual situation is the so-called \"backwardation\" futures curve, in which the front contract has the highest price. An example of such a backwardation situation occurred during the 2008 financial crisis with VIX futures:<\/p>\n\n\n\n

\"Line<\/figure>\n\n\n\n

When the S&P 500 falls sharply, VIX futures often switch from a contango to a backwardation forward curve. This change can be used to identify high points at an early stage.<\/p>\n\n\n\n

How VIX options trading works<\/h2>\n\n\n\n

Index options<\/u><\/strong><\/p>\n\n\n\n

In contrast to futures, options have a multiplier of 100. Although the options are based on the VIX index, their pricing is based on the corresponding futures. For example, if an option writer writes a put on the VIX with an expiry date in February, the price of the February future is decisive for the pricing of the option - not the current level of the VIX index.<\/p>\n\n\n

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\"Detailed
Figure: Example of a VIX index option<\/em><\/figcaption><\/figure>\n<\/div>\n\n\n

Key facts about VIX index options:<\/p>\n\n\n\n

TWS symbol: VIX (VIX Index)<\/p>\n\n\n\n

Multiplier: 100<\/p>\n\n\n\n

Exercise method: European<\/p>\n\n\n\n

Settlement method: Cash settlement<\/p>\n\n\n\n

Tick size: 0.01<\/p>\n\n\n\n

VIX-Optionen haben au\u00dferdem einen europ\u00e4ischen Aus\u00fcbungsstil, sind also nur bei Verfall aus\u00fcbbar und werden bar abgerechnet. Warum es f\u00fcr Privatanleger wichtig ist, das Cash Settlement<\/a> zu vermeiden, erfahrt ihr in this video<\/a>.<\/p>\n\n\n\n

Podcast tip: Protection against volatility shocks - short puts on the VIX<\/a><\/p>\n\n\n\n

NEW! Future options on the VIX<\/u><\/strong><\/p>\n\n\n\n

The newly introduced futures options differ from the classic index options as they are not based on the VIX index but on VIX futures. With a multiplier of 1,000, VIX futures can be booked into long or short positions on the expiry date (or during the term).<\/p>\n\n\n\n

Options on the first two VIX futures are currently tradable. The trading classes are identified by four digits, with the third digit indicating the corresponding trading week in the month:<\/p>\n\n\n\n

UX1<\/strong>E = 1st trading week of the month<\/p>\n\n\n\n

UX2<\/strong>E = 2nd trading week of the month<\/p>\n\n\n\n

The fourth digit defines the day of the week:<\/p>\n\n\n\n

UX1A<\/strong> = Monday<\/p>\n\n\n\n

UX1B<\/strong> = Tuesday<\/p>\n\n\n\n

UX1C<\/strong> = Wednesday<\/p>\n\n\n\n

Etc.<\/p>\n\n\n

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\"Details
Figure: Example of a VIX future option<\/em><\/figcaption><\/figure>\n<\/div>\n\n\n

Key facts about VIX futures options:<\/p>\n\n\n\n

TWS symbol: VIX (Future)<\/p>\n\n\n\n

Multiplier: 1,000<\/p>\n\n\n\n

Exercise method: American<\/p>\n\n\n\n

Settlement method: Physical delivery<\/p>\n\n\n\n

Tick size: 0.05<\/p>\n\n\n\n

Unlike VIX index options, options on VIX futures can also be exercised during their term. There is also a difference in the multiplier, which is 10 times higher for futures options. Thanks to physical settlement, strategies such as cash-secured puts or covered calls can be implemented directly on the future.<\/p>\n\n\n\n

Advantages and disadvantages of VIX futures options<\/h2>\n\n\n\n

Here are some of the advantages and disadvantages of trading VIX futures options:<\/p>\n\n\n\n

Advantages:<\/p>\n\n\n\n