VIX options, which began trading on February 24, 2006, allow traders and investors to speculate on future movements in market volatility as represented by the Cboe Volatility Index (VIX).
They can be used in a similar way to stock options, with basic strategies such as:
- Buying VIX Calls to profit from an expected rise in the VIX Index
- Buying VIX Puts to profit from an expected fall in the VIX Index
Advanced option traders can also use more complex strategies such as vertical spreads, butterfly spreads, and many more.
VIX Options Specifications
Market place: Cboe Options Exchange
Ticker symbols:
- VIX for options with monthly expirations
- VIXW for options with weekly expirations
Contract Multiplier: $100
Trading Hours in Central Time (CT) or Chicago Time:
- Regular Hours: 8:30 a.m. to 3:15 p.m.
- Global Hours: 7:15 p.m. to 8:15 a.m.
Expiring VIX/VIXW options do not trade during global trading hours on their Expiration Date.
VIX Options Characteristics
VIX options have some unique characteristics compared to stock options:
- The value of VIX options is more closely correlated to VIX futures than the real-time value of the VIX Index.
- They expire on Wednesdays.
- They settle in cash.
- They are European style which limits the exercise of the option until its expiration.