optionsguy posted on 09/09/12 at 10:14 PM

TradeKing Senior Options Analyst, Brian Overby, provides some tips if you are thinking about trading VIX options in September and October.

Hello Traders,

With the CBOE Volatility Index (VIX) trading last week near its 52 week low of 13.30 the option contracts that trade on the index have been getting a lot of attention. September and October historically have been the most volatile months for many of the past trading years. With that being true we we continue to see VIX trade in the low end of its yearly range. Throughout my many years of blogging I have written a plethora of blogs on the terms and conditions of the options that trade on the Index. In all of them I mention that VIX options are not your normal option contract. To name a few of the nuances, the monthly contracts usually stop trading on a Tuesday instead of a Friday and the VIX future contracts that trade alongside the VIX index play a big role in the pricing of the actual option contracts.

Below I have put together a “must read/watch” list of written and video blogs for the beginning VIX option trader.

Option contracts on the VIX are definitely not your father’s option contract. Trading them without studying up all the nuances is a recipe for disaster.

Regards,

TradeKing Options Guy and Senior Option Analyst www.tradeking.com

www.tradeking.com/ODD .

While implied volatility represents the consensus of the marketplace as to the future level of stock price volatility or probability of reaching a specific price point there is no guarantee that this forecast will be correct.

Online trading has inherent risks dues to system response and access times that may vary due to market conditions, system performance, and other factors. An investor should understand these and additional risks before trading.

Any examples used in are for illustrative purposes only — they should never be construed as recommendations or endorsements of any kind. No particular trading strategy, technique, method or approach discussed will guarantee profits, increased profits or provide minimization of losses. Past performance, whether actual or indicated by simulated historical tests, is no guarantee of future performance or success.

While implied volatility represents the consensus of the marketplace as to the future level of stock price volatility or probability of reaching a specific price point there is no guarantee that this forecast will be correct.

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