Since the answer is almost assuredly no, is there anyway to replicate that if you believe VXAPL or VXAZN is going in one direction or another?
Can you trade VXAPL or VXAZN?
- Thread starter Crash the Gate
- Start date
You can't trade the vol. metrics - yet - on singles names - in the listed market. If you think vol. is going to change there are dozens of ways to benefit from it, but it is very dependent on how skewed the vol. is in the option chain. The simple answer is a delta neutral vol. trade.
Is your expected move material? Everything from stock and delta neutral options and adjust when the vol. moves. Simple spreads all the way to BWB - depends on how the volatility lines up in the liquid options.
Let's say you expect vol. to decline materially - the solution could be something as simple as a delta neutral buy-write. Buy-write is just a form of a calendar or some people would think of it as a simple vertical. It all depends on how the skew lays out in the options matrix.
So not an easy answer, but something that brings you close to a non-directional trade.
Overall friction is a big issue here - small trades will eat you in friction.
Is your expected move material? Everything from stock and delta neutral options and adjust when the vol. moves. Simple spreads all the way to BWB - depends on how the volatility lines up in the liquid options.
Let's say you expect vol. to decline materially - the solution could be something as simple as a delta neutral buy-write. Buy-write is just a form of a calendar or some people would think of it as a simple vertical. It all depends on how the skew lays out in the options matrix.
So not an easy answer, but something that brings you close to a non-directional trade.
Overall friction is a big issue here - small trades will eat you in friction.
Positive (negative) vega trades can take advantage of IV expansion (contraction). Straddles, strangles, diagonals, and time spreads are generally vega positive. Butterflies, iron condors, and vertical spreads are generally vega negative.
Watch out for weighted vega concerns regarding positions with legs in different expiration cycles.
Watch out for weighted vega concerns regarding positions with legs in different expiration cycles.
Thank you for your replies drmark27 and ETJ. Maybe a better question is more simple. Why have these indexes if you can't trade them more directly? I can trade the VIX somewhat via options and through some uniquely designed ETFs but as far as I know I think that's the only "ViX-like" product I can trade itself. Please correct me if I'm wrong. There's no direct trade in say OVX or GVX for instance.
While not directly tradeable, I think they can provide useful information.
/VX converges to spot VIX at expiration and those futures are tradeable.
/VX converges to spot VIX at expiration and those futures are tradeable.