What are "buying VIX" and "variance swap"?

Discussion in 'Options' started by a529612, Jun 1, 2007.

  1. Any idea what they are talking about? Is buying VIX = buying put?

    "Correspondingly, our Global Investment Strategy service recommends staying invested in the S&P 500 and simultaneously buying the VIX (potentially through variance swaps which are more liquid). Currently, the VIX index is very cheap, providing an affordable way for investors to hedge risks on long positions."

  2. MTE


    It says right there that VIX is currenlty very cheap. So they mean buying VIX calls, but they advise buying it thru variance swaps rather than options. Google "variance swap" for definition.
  3. Why would you buy more VIX calls when you are long S&P already?
  4. Prevail

    Prevail Guest

  6. MTE


    Generally, when the market goes down the VIX goes up...
  7. Any advantage to hedging long S&P with long VIX call as opposed to other means?

  8. Cheaper than index options
  9. Does IB offer variance swap?

  10. Variance swaps can be replicated with straddles and hedges in the underlying.
    #10     Jun 2, 2007