2 thoughts on “What conclusions can I draw from examining the ^VIX futures before trading?”

  1. The VIX is just another way to gauge how people feel about the markets, specifically how fast people think stocks are going to go up or down. For instance, if people think the markets are going to crash very quickly the VIX will be high and if they think the markets are going to slowly come down it will be low.

    The main conclusion to draw from the VIX futures is whether this feeling is changing and in what direction. This information can be used by options traders to decide which type of option position will be most profitable versus the risk. As an example, say I think Apple is going to be lower in the next 30 days because of my research. If I am trading options, I can place 1 of 2 trades (for simplicity only, there are actually many types of trades): I can buy a put or I can sell a call. If the VIX is going higher, it might be better to sell the call. If the VIX is going lower, it could be better to buy the put. Of course, this whole thing can be done in reverse if you think a stock is going up.

    You can view delayed quotes on the CBOE website below:
    http://cfe.cboe.com/DelayedQuote/SSFQuote.aspx

    Use the symbols for different months from here:
    http://cfe.cboe.com/DelayedQuote/CFEFuturesSymbology.aspx

  2. ONE OF THE TRUE MARKET SAYINGS:
    "When the VIX is high – its time to buy!
    When the VIX is low – its time to go! [sell]

    Thanks for asking your Q! I enjoyed answering it!

    VTY,
    Ron Berue
    Yes, that is my real last name!

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