$VIX Weekly Futures Begin Trading

By Lawrence G. McMillan

The CBOE has listed $VIX weekly futures – their third attempt at a weekly volatility product that might compete with VXX weekly options.  Trading began on July 23rd.  

It is estimated that options on the new $VIX weekly futures will begin trading in three or four weeks, although that isn’t set in stone.  Certain details have to worked out with the OCC, such a margin requirements.  Typically, in the past, those things have taken three or four weeks.

In this article, we’ll look at some of the aids that the CBOE has made available regarding symbology for these new futures.  Also, we’ll review how these futures work.  Finally, we’ll take a look at the market depth and liquidity on the first day of trading.

Background

This is the third attempt at a weekly volatility product by the CBOE.  The first one was weekly options on the mini-$VIX futures (symbol: VM).  Those were not successful and were delisted in January 2014.

Then, more recently, the CBOE listed futures and options on the Short-Term Volatility Index ($VXST).  This seemed like a good product on the surface, but it was not successful in terms of trading volume.  The last futures and options on $VXST expired on June 18th, 2015. 

That brings us to this new concept.  In this case futures (and eventually) options will expire each Wednesday.   They are based on the $SPX options that expire 30 days hence...

Read the full article (to be published on 7/25/15) and get all of the trading recommendations by subscribing to The Option Strategist Newsletter today. Introductory 3 month trial subscriptions are available for only $29.