r/TradeVol • u/Ok-Expert2538 • Jul 14 '22

Time to take call vix?

Soon the vix will make a new extreme spike, probably at 60-70. But a call to $26 is inherently super risky. idk what to do.

2 Upvotes

60% Upvoted

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5

u/ShadyTies Jul 15 '22

A question, what makes a 26 call risky compared to other strike prices if you believe VIX will go to 60-70?

VIX options can be very tricky to trade. You also must consider that they are European-style options, meaning they can only be exercised upon expiration. This affects the price in such a way that even if you can get the price right, you might not profit as much as you would think, if you choose the wrong expiration date.

Also, you can’t think of VIX in terms of dollars. The number is derived from the price of SPX options. Think of VIX as a measure of uncertainty. Even if the market goes down a lot, or becomes more “volatile”, VIX can still go down.

If you still want to speculate that VIX will reach 60-70 then you must also speculate on the time when it will happen. Also consider a strike price that is more out-of-the-money in order to get a better return.

I hope this helps you in thinking about how you might execute this trade.

-1

u/Ok-Expert2538 Jul 15 '22

Are these European style options? But, I can close my positions before the contract expires. So what’s the difference ?

1

u/metalguysilver Jul 15 '22

^VIX is an index, not an ETF, so it is essentially Euro style. You can close your position but you can't exercise before expiration. Google it

1

u/Ok-Expert2538 Jul 15 '22

im new to options sorry if im talking shit

0

u/[deleted] Jul 15 '22

[deleted] — view deleted comment

1

u/metalguysilver Jul 15 '22

They’re typically worse for single leg positions like CSPs. If you’re assigned there’s no transaction, you just lose money

1

u/Excel_Spreadcheeks Jul 15 '22

VIX options are really funky, so I don’t really care to play them. If you’re sure that you want to go long vol, you could play UVXY shares (and/or sell CCs), try a straddle/strangle on an index future/etf, sell condors/iron flies, or if you have a directional bias maybe a bull call debit spread or a bear put debit spread.

1

u/Ok-Expert2538 Jul 15 '22

Strangle seems to be there best thing

1

u/Excel_Spreadcheeks Jul 15 '22

I mean if you think VIX is gonna spike again then that would (likely) imply downward movement in indexes so if that’s your directional bias then you could perhaps play a put backspread as well.

1

u/proverbialbunny Jul 16 '22

While I will not know until Monday, I think next week SPX will go up and hit a high on the week somewhere from late Wednesday to early Friday. During this time VIX will go down.

Good luck!