Cboe Global Markets

Mini VIX Futures

Mini Cboe Volatility Index (Mini VIX™) Futures

Mini VIX Futures Now Trading

Mini VIX futures are based on the VIX Index, and reflect the market's estimate of the value of the VIX Index on various expiration dates in the future. At 1/10th the size of the standard VIX futures contract, Mini VIX futures are designed to provide additional flexibility in volatility risk management and greater precision when allocating among smaller managed accounts.

Mini VIX futures provide market participants with opportunities to trade their view of the future direction of the expected volatility of the S&P 500® Index. This contract may also present opportunities to manage risk, generate alpha or diversify a portfolio. The smaller notional value of Mini VIX futures may appeal to:

  • Commodity Trading Advisors (CTAs) as a convenient, sub-account allocation contract size
  • Sophisticated market participants looking to hedge their portfolios or express their view on US stock market volatility, and
  • Proprietary trading firms seeking to execute volatility strategies or provide counter-party liquidity

Trade Your View on Equity Volatility

Before You Trade Mini VIX Futures

Before you trade Mini VIX futures, it’s important to understand the following:

  • Mini VIX futures are complicated financial products that are suitable only for sophisticated market participants.
  • Mini VIX futures involve the risk of loss, which can be substantial and can exceed the amount of money deposited for the futures position.
  • Market participants should put at risk only funds that they can afford to lose without affecting their lifestyles.
  • Before transacting in Mini VIX futures, market participants should fully inform themselves about the characteristics and risks of Mini VIX futures, including in particular those described below. Mini VIX futures market participants also should make sure they understand the contract specifications and the methodologies for calculating the underlying VIX® Index and the settlement values for Mini VIX futures.
    • Underlying Index: Mini VIX futures are based on the VIX Index, which is a financial benchmark designed to be a market estimate of expected volatility of the S&P 500®. The VIX Index is calculated by using the midpoint of quotes of certain S&P 500 Index options. (More information on how the VIX Index is calculated is available in our VIX FAQs.)
    • Not Buy and Hold Investment: Mini VIX futures are not suitable to buy and hold because:
      • On their settlement date, Mini VIX futures convert into a right to receive or an obligation to pay cash.
      • The VIX Index generally tends to revert to or near its long-term average, rather than increase or decrease over the long term.
    • Volatility: The VIX Index is subject to greater percentage swings in a short period of time than is typical for stocks or stock indices, including the S&P 500 Index.
    • Expected Relationships: Expected relationships with other financial indicators or products may not hold. In particular:
      • Although the VIX Index tends to be negatively correlated with the S&P 500 Index—such that one tends to move upward when the other moves downward and vice versa—that relationship is not always maintained.
      • The prices for the nearest expiration of Mini VIX futures tend to move in relationship with movements in the VIX Index. However, this relationship may be undercut, depending on, for example, the amount of time to expiration for the Mini VIX futures contract and on supply and demand in the market for those futures.
      • Mini VIX futures contracts trade separately from regular-sized VIX futures, so the prices and quotations for Mini VIX futures and regular-sized VIX futures may differ because of, for example, possible differences in the liquidity of those markets.
    • Final settlement Value: The method for calculating the final settlement value of Mini VIX futures is different from the method for calculating the VIX Index at times other than settlement, so there can be a divergence between the final settlement value of Mini VIX futures and the VIX Index value immediately before or after settlement. (More information is available in our VIX FAQs.)
    • Additional Information: Further information concerning the VIX Index and concerning futures and options based on the VIX Index is available in our VIX FAQs and white paper.

Making Sense of the VIX Index:
An Indicator of Expected Market Volatility

Mini VIX Futures Strategies

Mini VIX futures have unique characteristics. Like VIX futures, Mini VIX futures may behave differently than other financial-based commodity or equity products. Understanding these traits and their implications is important. Mini VIX futures may provide market participants with flexibility to hedge a portfolio, employ strategies in an effort to generate returns from relative pricing differences, or express a bullish, bearish or neutral outlook for broad market implied volatility.

Hedging

One of the biggest risks to an equity portfolio is a broad market decline. The VIX Index has had a historically strong inverse relationship with the S&P 500® Index. Consequently, a long exposure to volatility may offset an adverse impact of falling stock prices. Market participants should consider the time frame and characteristics associated with Mini VIX futures to determine the utility of such a hedge.

Risk Premium Yield

Over long periods, index options have tended to price in slightly more uncertainty than the market ultimately realizes. Specifically, the expected volatility implied by SPX option prices tends to trade at a premium relative to subsequent realized volatility in the S&P 500 Index. Market participants have used VIX futures to capitalize on this general difference between expected (implied) and realized (actual) volatility, and other types of volatility arbitrage strategies.

Term Structure Trading

One of the unique properties of volatility and the VIX Index is that its level is expected to trend toward a long-term average over time, a property commonly known as "mean-reversion". The mean reverting nature of volatility has been a key driver of the shape of the VIX futures term structure and the way it can move in response to changes in perceived risk. With multiple monthly contracts, there may be a wide variety of potential calendar spreading opportunities with Mini VIX futures depending on expectations for implied volatility.

Long/Short Volatility

Mini VIX futures provide a pure play on the level of expected volatility. Expressing a long or short sentiment may involve buying or selling Mini VIX futures.

VIX News

Cboe's Inside Volatility Trading Newsletter

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Volatility 411 Daily Video

Market Data

Settlement and Trading of VIX Derivatives

The VIX Index settlement process is patterned after the process used to settle A.M.-settled S&P 500 Index options. The final settlement value for Volatility Derivatives is determined on the morning of their expiration date (usually a Wednesday) through a Special Opening Quotation ("SOQ") of the VIX Index. By providing market participants with a mechanism to buy and sell SPX options at the prices that are used to calculate the final settlement value for Volatility Derivatives, the VIX Index settlement process is "tradable."

Select VIX Institutional Research

Visit Research Library

Download Whitepaper

CFA Institute Research Foundation

The VIX Index and Volatility-Based Global Indexes and Trading Instruments - A Guide to Investment and Trading Features (2020).

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University of Massachusetts

VIX Futures and Options - A Case Study of Portfolio Diversification During the 2008 Financial Crisis (Aug. 2009).

Download Whitepaper

S&P Dow Jones Indices

A Practitioner's Guide to VIX (Dec. 2017).

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S&P Dow Jones Indices

Reading VIX: Does VIX Predict Future Volatility? (Nov. 2017).

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BlackRock

VIX Your Portfolio (June 2013).

The inclusion of research not conducted or explicitly endorsed by Cboe should not be construed as an endorsement or indication of the value of any research.