Index Straddles Vs. VIX Call Options Can a more experienced options trader enlighten a relative newbie as to the differences between /advantages/disadvantages of trading these two methodologies in anticipation of a large move? I have already checked out the materials on the CBOE website - and am looking for additional clarification. My understanding thus far is that the VIX is still sensitive to directional movements in the underlying, as it has a strong inverse correlation to the S&P. As always, any help is greatly appreciated. Ben
nope, that would not do... i am looking for a delta neutral position - i am asking the question, how does the VIX isolate volatility if it has a strong inverse correlation to the S&P? i am also asking, is an index straddle more delta neutral than a VIX call? i want to speculate on pure volatility - without any influence of directional price movement - what is the best way to do that?
sorry about deleting my other post. VIX is the volatility of the S&P. I'm not sure about delta-nuetrality.. You could buy pure VIX or VXN futures . . you would be long volatility.
Have a look at the recent discussions on VIX options for a start: http://www.elitetrader.com/vb/showthread.php?s=&threadid=78688 There's more than meets the eye to this product. Read the VIX options specifications at the CBOE site. Know what you're trading. MoMoney.