VIX options

I looked at VIX options couple of month ago and decided it's not worth it.

Look at the specification carefully..the options are on the VIX futures, not the VIX index. The moves in the options are very slow and far from reflecting the moves in VIX itself.
The pricing model just looks screwed up (I'm sure it follows some logic, but I didn't figure it out)
Also the bid/ask spreads are too wide.

IMO, if you want to play on rising VIX, just buy index PUTs.

 

well, what seems interesting with the VIX options is the fact that VIX is mean reverting (tends to move back toward its historical average in due time). That's the reason why the short term futures have a higher value than the long-term one (inverted vix term structure). But this should not last for very long and we should get back to a flat to upward term structure within a couple of months. The underlying of the vix options as you said is the forward vix not the spot vix. Knowing all of that, isnt there a way to play the vix term structure movements to my advantage using options?

 

Any trade suggestions for VIX?

Currently in my account:

SHORT - AUG 10,11,12 - total 25 contracts
SHORT - SEPT 10,11,12,13 - 60 total

LONG - FEB/MAY 10,11,12,13

Currently my account has sustained large losses, can anyone recommend the best way out of this? Sorry to ask on a forum, but I'm out of options.

Do I:

1) Close out all the positions and take the loss?

2) Roll into Sept? (what worries me here is that the Sept contracts will spike as did AUG and really cause some problems)

3) If there is another option I would like to know?


Thanks

 

Is that a pun?

 

I guess these are all short CALLs and you didn't have any stop loss in place.

You have to assume VIX can go much higher:
38 in 1997
43 in 1998
43 in 2001
45 in 2002

There was no VIX yet in 1987, but I read somewhere that if it was in existance, it would have been over 60.

IMO, your best option is to cut your losses and learn a lesson.

 

Risk,

Thank you for your contribution to this thread mate. Good stuff.

 

I correct my previous post: During 1987 market crash, VIX was alive and kicking and climbed to 150!

 

The story goes from traders who were in the big option pit at the time is that the bulk of the fortunes were made on the days following the major decline(s) because of the sick IV's they were selling. But you all know this already. Heady days mate, heady days. I told them i never want to see VIX at 10 again in my lifetime and they laughed. A girl (i am male) can dream