VIX put options - what am I missing?

S

Saltynuts

So, I go here:

http://www.marketwatch.com/investing/index/vix/options

Look at the January 17, 2018 expiration puts. Let's pick one. Say the put with a strike price of 40. Bid is currently 24.7, ask is 25. Let's say I buy one for the ask, $25. VIX at this time is $9.40. So I pay $25, I buy VIX today for $9.40, and sell it in January 17 for $40, I've made $5.6. All the different strike prices have this same relationship - I've made money as soon as I've bought the option/underyling!

Isn't this the complete opposite of how a put is supposed to work? The underlying has to drop in value for me to make any money?

Thanks!
 
Ohhhh, I see. There is no VIX underlying, so the analysis is somewhat flawed. I guess you could use the VXX underlying, but given its slow decline that probably makes these options prices make sense.

Thanks cdcaveman!
 
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