Make money trading options on the vix


Make money trading options on the vix


NEW YORK (Fortune) -- Wild swings have been the norm in the stock market lately - as you may have noticed - with the Dow Jones industrial average posting triple digit moves nearlyevery trading day since the beginning of the year.The Dow made three-digit swings 55 times in the second half of 2007, vs. 23 times in the first half of the year. While such volatility is scary, there is a way you can profit from it.The key is the CBOE volatility index, known as the VIX ( VIX).

They are great trading tools in a down-turning market. Currently, the VIX is the most commonly used method of measuring expected volatility. A VIX value below 20 indicates low volatility. That means prices are not changing very quickly. On the other hand, a VIX above 30 is a sign of high volatility, which means uncertainty is high and there is fear in the markets.

The one constant on the stock markets is change. Said differently, volatility is a constant companion to investors. Ever since the VIX Index was introduced, with futures and options following later, investors have had the option to trade this measurement of investor sentiment regarding future volatility.

At the same time, realizing the generally negative correlation between volatility and stock market performance, many investors have looked to use volatility instruments to hedge their portfolios.Unfortunately, it is not quite that simple and while investors have make money trading options on the vix alternatives than ever before, there are a lot of drawbacks to the entire class.Investopedia Broker Guides: EnThe VIX is by far the most misunderstood instrument trqding investors.

To be afraid is a sign of common sense. It has a lot to do with futures, contango, tradign and moneey phenomena. Regarding VIX options. There are various levels of option trading available (e.g., the first level allows covered calls). My experience is that moeny trade VIX options you will need to be authorized to trade at the second level. These levels vary from brokerage to brokerage, so you will have to ask what is required to be long VIX options.

If you are just getting into options trading this is as high as you want to go anyway. In general, the same sort of res.




Make money trading options on the vix

Make money trading options on the vix

Make money trading options on the vix



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