Trading VIX/ Volatility

Hi everyone,

I am looking into trading volatility and I have a question for people experienced with volatility trading.

I developed a strategy based based on the vix index. Since the vix futures are not very liquid I want to use varswaps instead. Would the results be the same? Or are varswaps less volatile then the vix index or vix future?

Thanks!

Raver

 

Check out the CBOE VIX options. I've noticed some pretty good volume in them.

Aaron Schindler
Schindler Trading

 

You're kidding right? You think the VBI is illiquid so you want to trade variance swaps instead? Variance swaps are very liquid in the OTC market, not on the exchanges. If you want to trade the synthetic VBI through the options there is plenty enough liquidity to do so.

 

i worked with variance swaps several years ago but retail investors cannot trade them. i am not sure about the vix but i think it's implied vol whereas varswaps are bets on realized vol over a period of time.

 

Thanks for the answers, I forgot to mention I have access to the OTC market.

Basically I want to set up a vega position and hold it for about 20 days. I am orienting which is the best way to set it up. Varswaps or straddles or strangles.

I am leaning towards strangles because the frequency of delta hedging is smaller then with atm straddles.

 

what do you mean by smaller ? The hedge interval or lesser adjustments ?

 

I meant lesser adjustments

 

Just curious - has anyone here traded the VIX futures? Any feedback would be great. Also, what website(s) are good to reference about these?

 

I have found there to be pleanty of liquidity on the VIX options. I am not sure how many dollars you are throwing at a position, but you might call for a quote in size and see what you think.