Trading VIX as a CoveredCall possible? :-)

[earth_imperator]

Sorry for this newbie question regarding VIX:

For the CBOE Volatility Index VIX (ticker ^VIX at YahooFinance) I just wanted to make a CoveredCall trade at the broker TDA.
The ticker at TDA is $VIX.X . In the web interface: when I set "Underlying symbol = $VIX.X" and choose "Option Strategy = Covered Call" and then click on "Option chain" it shows the chain table, but for all strikes the Bid and Ask are just 0.00. I tried several times the expiration date 2023-01-18 w/o success.
Why is it so, what does it mean?
Does it mean VIX cannot be traded as a CoveredCall?

 

[Robert Morse]

There is no underlying stock or ETF to use to buy. As an alternative, you can buy a DTIM call vs the one you sell as a vertical and have the same risk/reward.

 

[stepandfetchit]

While I see no reason to desire a Covered Call on $VIX.X, The underlying would actually more appropriately reference the /VX Futures associated with the chosen expiration.

 

[destriero]

Sorry for this newbie question regarding VIX:

For the CBOE Volatility Index VIX (ticker ^VIX at YahooFinance) I just wanted to make a CoveredCall trade at the broker TDA.
The ticker at TDA is $VIX.X . In the web interface: when I set "Underlying symbol = $VIX.X" and choose "Option Strategy = Covered Call" and then click on "Option chain" it shows the chain table, but for all strikes the Bid and Ask are just 0.00. I tried several times the expiration date 2023-01-18 w/o success.
Why is it so, what does it mean?
Does it mean VIX cannot be traded as a CoveredCall?

@thecoder, ofc you can. Short the put, buy the call (same strike) and sell the upside call; better yet, simply short a put (synthetic CC). The issue is that you think that you can short the put where cash is trading, but the vol is marked to the nearby futures.

"Son, stupid and barefoot is no way to walk through life."

 

[earth_imperator]

There is no underlying stock or ETF to use to buy. As an alternative, you can buy a DTIM call vs the one you sell as a vertical and have the same risk/reward.

But then the margin requirement (or in my case the cash requirement) does not reduce.
Normally the cash requirement is SpotOfUnderlying - Premium.
Ie. such a combo-order reduces the cash or margin requirement.

But when using a synthetic or another ticker for the underlying then it of course doesn't work the same regarding cash/margin requirement... :-(

 

[Robert Morse]

Although this is accurate, because there is no cross margin and DITM calls have very little premium over parity, the verticals call spread is more margin efficient.

While I see no reason to desire a Covered Call on $VIX.X, The underlying would actually more appropriately reference the /VX Futures associated with the chosen expiration.

 

[earth_imperator]

Good news:
My scanner just found a replacement using UVIX with slightly less projected outcome, but that's 'nuff for me...

 

[stepandfetchit]

I am guessing a bit, but would something like this be close? -- Change the strikes to dial in what you want.

 

[stepandfetchit]

Good news:
My scanner just found a replacement using UVIX with slightly less projected outcome, that's 'nuff for me...

UVIX can be a nice product to trade.

 

[earth_imperator]

I am guessing a bit, but would something like this be close? -- Change the strikes to dial in what you want.

stepandfetchit, thx, but my problem is the cash requirement (collateral) the broker asks for.
It is normally "SpotOfUnderlying - Premium".

Yes, UVIX works as it's a normal underlying (ETF).