19. How to Trade the VIX

Basic definitions
  • Volatility: Degree of variation of a trading price series over time, ussually measured by the standard deviation of logarithmic returns
  • Implied Volatility: Volatility calculated by applying pricing model to option prices and obtaining the volatility value that results in the current option price
  • VIX Implied volatility of the SPX index, also called the fear index, it is calculated based on the prices of SPX option published in real time by the CPOE
  • The vix itself is just an index, you can't buy ir or sell it
  • We can trade the VIX with VIX futures, VIX options and VIX ETPs
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Table Of Contents
19. How to Trade the VIX
Basic definitions