11K contracts on Jan07 20 calls VIX

Discussion in 'Trading' started by putsncalls, Dec 21, 2006.

  1. I do not get this.

    Why would someone buy so many calls on VIX ? (VIX is at 10 and change today)

    Premium on 20 was same as 19 or 18 or (well almost)

    Anyone have any insights on the VIX options trades today ?
  2. multimillionaire portfolio owners looking either to hegde or gamble.
  3. I understand that...but he / she could have bought the 19 calls or 18 calls

    why 20...maybe just a numbnut ? Or is there a more profound reason ...
  4. It might have been that strike for a pre-determined amount of capital outlay, strategy, etc. The trader also might have done something on the S&P itself and was merely looking to grab some volatility on this end of it.

    Also for that trade, the $19 call strike, would have cost $55000 more & the $18 strike would have cost $110000 more.

    Remember VIX options are uniquely complex & do not work or settle like equities or even index options. For starters they settle on the following Wednesday after the standard 3rd friday options expiration of each month & consists of a unique calculation directly related to S&P 500 index options at various weighted strike prices.