This article was originally published in The Option Strategist Newsletter Volume 15, No. 6 on March 30, 2006.
As our regular subscribers know, the CBOE recently listed cash-based options on its Volatility Index ($VIX). We have published several recent articles describing the details of these options, so we’ll review those only briefly in this article.
This article was originally published in The Option Strategist Newsletter Volume 13, No. 4 on February 26, 2004.
As we’ve mentioned before, the CBOE is about to offer us the ability to trade volatility. We expect this to be a very successful product – perhaps the most successful new listed derivative product since the introduction of index options over 20 years ago. We want you, our readers, to be prepared for this event. Hence, we will run a series of short articles prior to their introduction, to ensure that everyone knows the facts and understands the basic strategies.
This article was originally published in The Option Strategist Newsletter Volume 15, No. 7 on April 14, 2006.
Areader question regarding last issue’s feature article indicates that some expansion on the topic might be useful.
This article was originally published in The Option Strategist Newsletter Volume 16, No. 13 on July 13, 2007.
In this newsletter, over the years we have presented many methods for protecting a portfolio of stocks. Some are “ancient,” such as buying S&P 500 Index ($SPX) puts and some are “new,” such as buying $VIX calls. With the continuation of the bull market well into its fourth year (making it the fifth longest bull market in history – but not the fifth largest), many portfolio managers and individual investors are becoming concerned that a sharp correction may be more than just a remote possibility. As such, the topic of protecting a portfolio with derivatives has once again risen to the forefront. With that in mind, I wrote The Striking Price column in Barron’s this week, on this topic.
By Lawrence G. McMillan
With the current uncertainty in the stock market, the $VIX index has once again received a lot of financial media coverage. Last week we recommended the purchase of $VIX calls as a hedge for your portfolio. We received numerous comments from people who took our advice but didn't seem to understand how $VIX options price.
