How to buy vix options. Medium-term horizon, long-term horizon, investment advisor. Get email alerts. Writing articles on various option strategies requires a broad knowledge of how options work, and volatility is one of the main components. So I read just about every article that I can on "the VIX" to gather as much information as I.

How to buy vix options

/VX Futures vs. VIX Options Trading

How to buy vix options. Options traders are betting that the VIX falls back to earth soon, and they can double their money if they're right.

How to buy vix options

A pattern of huge, near-daily trades on the VIX is turning heads in the options market. The money-losing trades in question have been purchases of call options on the CBOE volatility index. These represent bets that market volatility is set to rise, and to a lesser extent, that stocks are set to fall. Sussing out the actions of an institutional trader based on public information about options trades can be difficult, if not impossible.

But this trader made it easier by leaving a clue out in the open. So in other words, they don't care too much what the strike is; they just pick the option that's worth 50 cents. These options will expire worthless unless the VIX skyrockets 82 percent in a bit more than a month and a half, and will lose money unless the VIX closes above In terms of the number of contracts, it was the single biggest trade of the day on any index or stock.

And that wasn't all. Unsurprisingly, this strategy appears to have a marked effect on the overall market for VIX options. Total VIX call open interest has risen to an all-time high thanks to 50 Cent's purchases, Chintawongvanich said.

Ironically, the huge bets on the VIX could end up dampening volatility. So is this the case of a huge hedge fund quixotically betting it all on a volatility spike in the near future? Perhaps, but the story is almost certainly not that simple. Go out and do it, and I don't care what you do just spend this much money. Weinig theorizes that while buying VIX calls, 50 Cent is also betting against volatility in another form, such as VIX futures which have indeed seen their share of shorts spike recently.

Selling futures "would cover the carry cost of the options, while still maintaining a nice tail hedge in an upside shock to implied volatility," Weinig wrote. As we haven't seen this in some while, our 50c friend remains unscathed for the time being. Or, a bit more exotically, it may represent part of a fund's outright bet on a particular sort of volatility environment.

It may be impossible to say for sure. At the same time, it's worth noting that tracking down 50 Cent's motives may provide little in the way of useful information. The dollar was volatile in Friday trading but could catch a bid next week ahead of the employment report. Stocks fell after a report that Michael Flynn was directed by Trump to talk to Russians sent investors on a wild ride.

Despite Friday's sell-off, one strategist makes the case for why he's still bullish on the market. Jeremy Siegel, professor of finance at the Wharton School, discusses the market in this wide-ranging interview with Eric Chemi.

Gina Sanchez of Chantico Global says a North Korean attack, should one occur, isn't likely to cause significant long-term market impact. Chad Morganlander of Washington Crossing Advisors is watching the dollar this week and expects it'll begin to strengthen heading into the second half of the year. Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage.

This is where experts from across the financial world including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income come together to find the best ways to capitalize on recent developments in the market.

Where headlines become opportunities. A mysterious trader known as '50 Cent' is betting millions on a volatility spike but why? The dollar took a dive on Friday, but it could catch a bid next week. Stocks close lower after Michael Flynn report sends Wall Street on wild ride. Brief dip aside, history suggests that big gains are in store for December. More From Trading Nation Transport stocks are on fire this week, and may be set for more gains. Dow stock Caterpillar and two others could propel the index to 25, Dow rips points higher, closes above 24, as chances of Senate tax bill passing rise.

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Jeremy Siegel on the next big milestone for the Dow. Trades to Watch If a North Korean conflict plays out, this is what will happen globally. This under-the-radar report could be crucial for the market. When the dollar is weak, here's the sector that wins. Trader Bios Stacey Gilbert.

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