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.