Question concerning Vix options

Discussion in 'Options' started by heiasafari, Oct 7, 2009.

  1. I have a very basic Vix options question, I never traded them so I am unfamiliar with it:

    Lets say for example that I buy a call on the vix future, december 28 for 2,00$... It is still unclear to me how this is priced.
    Vix options are multiples of 100, so in theory that means a 2,00 call costs 200$ per contract. The Vix future itself is in multiple of 1000$ so dec 28 is really dec 28000$ right? So that would mean buy buying 1 contract that your are taking a position on 28000$*100= 2 800000$...

    To me this doesn't jive... To wield such a huge position on a 200$ investment??? That does not sound correct.

    Thanks in advance
     
  2. What buying VIX options contract has anything to do with VIX futures position? Those are 2 different contracts of different size. Your options position will be:
    price of 1 unit of VIX dec future * 100 units.
     
  3. MTE

    MTE

    VIX options are priced off futures, but the two are different contracts so you cannot just cross over from options to futures like that.