2 Trades To Make Before VIX Expiration

The Option Pit VIX Traffic Light is Red: Volatility Is Likely to Drop.

Hey Traders,

The VIX October future expires on Wednesday morning.

Heading into expiration, I can see some interesting expiration plays that could be nicely profitable.

As we head into October expiration, this  month is shaping up to be potentially a new settlement low for the VIX.

Here are the monthly settlement prices for VIX futures and options so far this year:

VX/U1 – 2021-09-15:   19.7900

VX/Q1 – 2021-08-18:   18.5800

VX/N1 – 2021-07-21:   18.9000

VX/M1 – 2021-06-16:   16.3800

VX/K1 – 2021-05-19:   25.2100

VX/J1 – 2021-04-21:   19.2800

VX/H1 – 2021-03-17:   20.8000

VX/G1 – 2021-02-17:   22.8100

VX/F1 – 2021-01-20:   22.5900

With the VIX now below 17, we could be inline to settle below June’s low of 16.38,  in the 15s if the market can stay strong…

With that in mind, I was looking at VIX options and saw a couple of inexpensive option plays for October that could pay off nicely …

Let’s start with the October 17-strike puts. They are currently $0.45, and the VIX is 16.50.

That trade, if it expired today, would automatically make $0.05…

But here is the kicker: if the VIX does get below 16, these puts will more than double.

I am potentially going to pick up a couple of these today.

Speaking of cheap …

Take a look at the 16-strike puts, they are .05.

While we might not settle below 16, if I buy 100 of these for $500,  and VIX can manage get into the mid 15’s, these puts will go up by about 3-5 times …

Not a bad pay off for a cheap bet.

Your Only Option,

Mark Sebastian

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.