VIX Covered Calls?

R

rockthecasbah12

If somebody wanted to essentially trade a "VIX covered call", what would be the best way going about this. I know VIX has listed options, but you cannot trade the VIX itself. I know there are 2 different futures and the VXX. Is anyone here experienced in Volatility trades and has insight for me?
 
Do you want to trade something like a covered call? If so, then I assume that your stance is, "I am bullish, but only a little." Then why not trade a spread, say an ATM bull call spread? Buy the 15 strike, sell the 20, for example.
 
Can you tell me exactly how the VIX options are settled? My goal is to take advantage of the high premium on some of the vix calls. Depending on exactly how they work, this may or may not actually be a possibility.
 
Quote from rockthecasbah12:

Can you tell me exactly how the VIX options are settled? My goal is to take advantage of the high premium on some of the vix calls. Depending on exactly how they work, this may or may not actually be a possibility.
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You can find all info here.
 
Quote from rockthecasbah12:

If somebody wanted to essentially trade a "VIX covered call", what would be the best way going about this. I know VIX has listed options, but you cannot trade the VIX itself. I know there are 2 different futures and the VXX. Is anyone here experienced in Volatility trades and has insight for me?
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You can use LEAPS as the underlying and sell front-month calls against them. You then profit from the exponential theta difference between the two expiration dates.

Ninna
 
Quote from nLepwa:

You can use LEAPS as the underlying and sell front-month calls against them. You then profit from the exponential theta difference between the two expiration dates.

Ninna
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You have two problems with that. First, VIX options don't have Leaps, they only go out to May11. And second, even if there were Leaps, the front month options and Leaps would have different underlyings.
 
Quote from MTE:

You have two problems with that. First, VIX options don't have Leaps, they only go out to May11. And second, even if there were Leaps, the front month options and Leaps would have different underlyings.
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excellent answer and the different underlying as you mentioned make option trading these a bit illogical especially to those who think there are leaps for vix options, lol
 
Quote from rockthecasbah12:
----trade a "VIX covered call"....
----what would be the best way going about this.
----insight for me?
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Instead of a covered-call, why not just do a short-put instead? :confused:
 
Quote from nazzdack:

Instead of a covered-call, why not just do a short-put instead? :confused:
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Being short a put is too high or risk for me. Basically, I want to be as close to possible as holding the underlying security in this trade. With VIX, that is a little more difficult because I cannot outright buy it.
 
Someone let me know if I'm wrong here, but the VIX mini futures trade at 100 x VIX, so one mini future contract would be around $2000 currently? Then I would sell one VIX call option. Does that sound about right for getting as close to a covered call for this?
 
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