Non-directional Option Strategies for Stocks and Indexes

[Options_Trader]

VIX increased today. Who knows the market maker ways?:clap:

One observation: If options premium is decayed significantly before a holiday, it might hold or increase after the holiday. I have seen this twice.

 

[Options_Trader]

One observation: If options premium is decayed significantly before a holiday, it might hold or increase after the holiday. I have seen this twice.

People who sold options on Wednesday EOD are trapped due to VIX increase.

 

[TradeOptions]

Ya, VIX has risen by 8 %, Calls and Puts both ended in green and the option writers suffered.

 

[TradeOptions]

Originally Posted by munde_77
INDIAVIX 06 May is nearly up 250 points . 1 lot is 750

So 750x250 = 187500 profit in 1 lot. Lot size is 750 . Difficult for retailers to participate and trade.

VIX is up more than 8%. VIX is trading at 33.08

Time for Options sellers to sell and time to option buyers to book profit

VIX Values -

VIX % Changes -

 

[gmt900]

VIX Values -

VIX % Changes -

Is the spike in VIX due to trading in VIX?

Will it go down after weekly expiry on Tuesday?

 

[TradeOptions]

gmt bro, I have personally never traded VIX Futures yet, so I will not be able to answer that. Hopefully some Expert member will give answer to that.

Regards

 

[visphy]

vix will surely go down after expiry

 

[TradeOptions]

vix will surely go down after expiry

yes definitely

 

[Options_Trader]

Is the spike in VIX due to trading in VIX?

Will it go down after weekly expiry on Tuesday?

Although am not sure, I will try to answer this:

The futures segment can drive cash segment as we see in Nifty (arbitraguers come in). As futures price increase, demand in Nifty spot increases driving Nifty spot higher. However, not likely in this case.

Suppose trader A starts buying VIX futures anticipating a volatility increase by 06 May, driving prices up. Trader B shorts the VIX futures while buying options maintaining a vega hedge, creating a demand resulting in higher option prices, hence higher IV. However, if we look at the volumes (only 99 near month contracts were traded for VIX futures which is quite tiny compared to the options volume), we notice that the demand created for options is not significant enough to drive up option prices. Hence, IMO it is not a likely scenario.

Further, I don't think that option IVs are a function of demand and supply. It might be to some extent but not enough to drive IVs by 8% as seen today. IVs represent expected future volatility. It may be possible that market makers believe that volatility will increase in the near future, hence the increase in IV.

 

[LivetoTrade]

Is the spike in VIX due to trading in VIX?

Will it go down after weekly expiry on Tuesday?

Yes, Vix is an important factor in determining Option prices.

If you see the forward contracts, the week of 20th May shows a decline in Vix prices.

Hope this helps :thumb: