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VIX - CBOE Volatility Index

Strategies Involving Volatility and VIX

VIX Futures and Options

Detailed contract specifications for VIX Futures can be found here.

VIX futures and options could be used by investors for a variety of purposes, including:

  • To take advantage of a market view on the direction of near- term volatility,
  • To hedge volatility risk with VIX futures or VIX options,
  • To manage risks associated with the growing markets for volatility and variance swaps,
  • To take advantage of arbitrage opportunities between S&P 500 (SPX) options and VIX futures and options.

Options Strategies Involving Volatility and VIX
If an investor has a view that VIX and VXN might rise significantly in upcoming months, the investor could consider a long straddle (Adobe .pdf) with index options - a long straddle involves holding both a long call and a long put position with the same strike price and time to expiration. The investor also could consider a long strangle.

CBOE Volatility Index (VIX)