CBOE picked a heck of a week to launch VXST options as the S&P 500 lost 2.65% last week which is the worst weekly performance since May 2012. Of course months of planning went into the successful launch of VXST options on Thursday and there was no way the price action in the S&P 500 could have been anticipated. There was respectable volume on Thursday and Friday for VXST options despite the S&P 500 dropping a total of 3% over the first two days of VXST option trading and VXST rising almost 40% over that period of time. I say despite this performance because many traders will use VIX (and now VXST) options to be positioned for a rise in volatility. That’s pretty difficult to do when the market is experiencing a volatility spike.
There was one nimble trader that stepped in early on Thursday to get positioned for the end of week rise in VXST. When VXST was still in the lower teens there was a buyer of 2000 VXST Apr 16th 16 Calls that paid 0.30. Those options closed Friday with the bid side at 1.50. I’ll be the master of understatement here and say that’s not such a bad first VXST option trade.