If you buy VIX puts or calls, what happens after expiration day?

Discussion in 'Options' started by jackpearson, Oct 11, 2011.

  1. What happens when the calls or puts expire if you didn't exercise them?
  2. swag


  3. Broch


    Without specifics in your scenario there are too many interdependent variables to postulate. The short answer is: cash delivery multiplied by 100, according to the contract specifics of the VIX instrument.

    Did you write a call on a core position you own long? Or a put? Did your call or put under or outperform? If the latter, you collect the premium, but since you didn't close out your position you are still physically and legally binded in the trade, and therefore could be owing more money than bargained for. Irregardless, if you under perform you owe cash plus the premium. If over, you owe cash and keep the premium.

    Carry trades on futures options burn even the most seasoned investors with red tape and fine print. My advice: stay out.
  4. FSU


    Really nothing to postulate. The VIX is cash settled. Any options you have are converted to cash at the settlement price on expiration. Its that easy.