Well said. When I bought the calls last Thursday at 1.15 they had an intrinsic value of about 1.05 based on that weeks VIX future, so only .10 of premium with almost a week left. Was a great play if you thought weekly VIX was going up.
that is impossible unless there is less than a single day of expiration . all ITM VIX calls, including ones that expire in just 6 days, have at least 60 cents of extrinsic value ..no free lunch with VIX thats for sure
No you are wrong. Remember you compare the weekly vix options to the corresponding weekly vix future. In this case the midpoint of the weekly vix future was about 14.05 and the weekly vix call was trading at 1.15. both expired this morning, with the original trade taking place last Thursday afternoon. Thus there was only about 10 cents of premium in these calls.
Yeah, FSU is right. When I posted that, (I went back and looked at the chart, the VIX was 13.97). I was pretty sure we'd see a selloff into Yellin, at the time. And sure enough,..... they went well over $2 on 8/26. Thats why I said they were cheap.
Wow for someone who constantly dissed on options we now know why....you are way off. We priced them on the day the post was made and there was very little time value premium for an ITM call but these are weeklies so how much time value premium do you expect to be there. It was not a free lunch but a call ITM, nothing more.
For me.... paying time value premium is worse than VD. I'd rather go as deep in the money as need be to pay very little. Sure the reward is not as great, but when you are good at picking the right stocks on the right day.... its the only way to go. 20% scalps in the matter of an hour or two works just fine for me. Time premium SUCKS unless you are writing the option. Then they're awesome. Look at Marsman, he's getting rich doing it.
if you can get 10 cents of extrinsic value on VIX calls that expire in 1 week < I have a bridge to sell you .maybe you can get 10 cents if they expire in a day..but no way if they expire in longer than a week. That would be the equivalent of 'going long the vix' which is impossible .
Pull up a one minute daily chart for the 25th on $VIX and look at the Calls and see for yourself. I don't make stuff up when I post, .....and thats why I posted it... it was a good deal. It was posted right here for the world to see. Maybe it was an anomaly, but it is what it was.
Ignore him vanz....his knowledge of options couldn't fill a thimble... He does not understand VIX options/VX relation, weeklies and ITM options.