VIX Trade Redux?

Published on
July 27th, 2018
Topic
Volatility, Micro, Trading
Duration
8 minutes
Asset class
Equities

VIX Trade Redux?

Trade Ideas ·
Featuring Michael Purves

Published on: July 27th, 2018 • Duration: 8 minutes • Asset Class: Equities • Topic: Volatility, Micro, Trading

Michael Purves, chief global strategist at Weeden & Co., revisits his plan to profit from rising volatility. He explains how he is using options to put on a fresh VIX trade in this interview with Justine Underhill. Filmed on July 23, 2018.

Comments

  • DS
    David S.
    28 July 2018 @ 01:34
    Mike Green in an interview on volatility said the ETF trading may be attenuating the VIX. Any comment? DLS
  • RP
    Ryan P.
    28 July 2018 @ 12:19
    I learned a big lesson last time I did this trade. VIX options are different than regular options on equities or etfs as they are based on the forward prices of that month. I put on a call spread last February right before the spike but idiotically bought July 18’ calls to cheapen the price. While I made decent money it was almost 10x less than what I would have made if I owned the front month calls. My euphoria transformed into frustration which led to spending a week reading understanding how these things trade and price. Just wanted to share this so others don’t make my same mistake.
    • RP
      Ryan P.
      28 July 2018 @ 12:30
      http://www.cboe.com/products/vix-index-volatility/vix-options-and-futures/vix-options
    • my
      markettaker y.
      28 July 2018 @ 18:38
      What else did you read? How can you profitably get long vol when the product decays constantly and it's impossible to get the timing right?
    • MK
      Michael K.
      28 July 2018 @ 20:55
      Market taker this is exactly the art of option trading. Dive deep it’s a rich space. Decomposing full Greeks evolution over the lifetime of a delta hedged trade is a minimum. Else you’re walking through a cave with no lamp. Not being facetious.
    • RK
      Robert K.
      29 July 2018 @ 21:06
      @Michael K: just for correctness delta hedging does not influence the greeks. You delta hedge based on (some of) the greeks.
    • RP
      Ryan P.
      31 July 2018 @ 01:01
      Market taker - I read a lot haha probably too much tbh, and got down and dirty in the weeds within cboe/ white papers on vix options. There’s a ton of free stuff out there just gotta dig. Honestly you have to think outside the box with these. Some people sell theta via covered calls on positions they own to cheapen the cost to hold the position. Others like Mike Green (which I think was amazing trade had he stayed in it ) bought out of the money PUTS on XIV (much more efficient) I probably would have done that trade if I was 1% as smart as him. Nancy Davis is also very very good with options and I highly recommend watching any of her videos to see how she sets stuff up.

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