best way to trade long options on SPX with high VIX?

Discussion in 'Options' started by Cdntrader, Aug 25, 2011.

  1. What is the best way to trade long options on SPX with high VIX?

    I got burned a couple of weeks ago going long some out otm calls and holding overnight; when the market gapped higher the next day but the options dropped below my cost price because a huge drop in VIX.

    How should I play this scenario? with itm options?

    Thanks

    Sincerely,

    Dumbass Options Daytrader:D
     
  2. rmorse

    rmorse ET Sponsor

    You can try buying vertical call spreads, or selling vertical put spreads to get long rather than straight long call.
     
  3. Too complex.

    Maybe deep itm calls?

    On second though I should just look @ what happened in the rest of the series that day.
     
  4. Options are a tool. You don't need to trade them everytime you want to express a view. And if the vol is too high then you shouldn't buy them. If you can't sell them when the vol is too high then you shouldn't trade them in this instance.
     
  5. joneog

    joneog

    Anything simple is gonna have the same problem. Deep ITM calls will give you more delta relative to vega but you're better off just going long the underlying when volatility is high, if you're not willing to spread. (The further ITM you go the more you are replicating a straight long position anyway)
     
  6. how about a simple credit call backspread? If you think vol is high, you shouldnt fall too fast in the sea of death. Maybe octobers aiming to be outta there mid september at the latest?
     
  7. If that's too complex you're missing out on all the fun and potential in option trading.
     
  8. ajna

    ajna

    Short ratioed diagonals to the upside.