This Week in VIX Options and ETPs

VIX was higher on the week even though the S&P 500 closed the week higher as well. The big move down on Friday along with possibly little anticipation as there is an FOMC meeting this coming week. Even though VIX was higher, the long ETPs were all down. These ETPs have positions based on VIX futures and although the index climbed, VIX futures were mostly lower on the week (May was the exception). The short VIX ETPs liked the lower futures and were up accordingly. Finally the hedged products were higher, with VIXH having a very nice week relative to the S&P 500.

Interesting goings on in the VIX options area this week and it was all focused on a higher VIX over the next few months. Active call buying was seen in the Nov 47.50 and 55 Calls, Dec 50 Calls and Jan 50 Calls.

Andrew Keene also pointed out a big bullish spread trade in January VIX Puts that happened Friday in the blog below –

There was an exception as a neutral trade that combined both futures and options hit the pit on Wednesday. A trader sold the VIX Nov 17 Straddle and bought the VIX 25 Call for a net credit of 2.57. Then to top it off they sold November VIX Futures at 16.65. This trade is targeting VIX staying in the mid to upper teens, but has some protection in case an ‘event’ in the markets pushes VIX higher due to the long call position. ETNs.jpg