fbpx A New Volatility Product: Mini $VIX Futures | Option Strategist

A New Volatility Product: Mini $VIX Futures

By Lawrence G. McMillan

The CBOE has listed mini volatility futures, trading with the base symbol VXM. These are worth $100 per point of movement, as opposed to the $1,000 per point of movement on the “big” volatility futures contract. Everything else is the same between the mini and the full contracts: expiration date, settlement pricing, etc. So far, only the first four months have mini contracts, while there are “big” volatility futures for nine months out. In hedged strategies, these can now be paired with the micro e-mini S&P futures (worth $5 per point of movement). This will allow smaller accounts to take advantage of some of the more sophisticated strategies. Volume in the mini volatility futures has been mostly in the front month, but the markets are tight (5 cents wide) so they are a viable trading tool at this time.

There is no change in the volatility options that are traded on the CBOE. They are worth $100 per point of movement of course, and they are priced off of the futures – mini or “big” since they trade at the same price. There are no plans for a “mini” option contract worth $10 per point that I am aware of.

In a somewhat related manner, the CME has announced that they will list futures contracts on the NASDAQ Volatility Index that they calculate – $VOLQ (quoted as an index on your quote system). $VOLQ was created in February 2019. The new futures will begin trading on October 5th, just in time for the volatility leading into the election. They will be worth $1,000 per point of movement, just as the “big” $VIX futures are. There was no mention of options on these futures, but I am sure there will be.

This article was taken from the 8/14/2020 edition of The Option Strategist Newsletter

The Option Strategist Newsletter $29 trial

Share this

Option Strategist
Blog Search

Recent Blog Posts

Trading or investing whether on margin or otherwise carries a high level of risk, and may not be suitable for all persons. Leverage can work against you as well as for you. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. The possibility exists that you could sustain a loss of some or all of your initial investment or even more than your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and investing, and seek advice from an independent financial advisor if you have any doubts. Past performance is not necessarily indicative of future results.
Visit the Disclosure & Policies page for full website disclosures.