Today we discussed the Gamestop (GME) saga. How the chart is likely to behave and how that is similar to the VIX during periods of turmoil. Speaking of the VIX, we placed two (2) trades on the VIX index options. Some important points were made about how the VIX is priced based on futures. Also, why we avoid diagonal/calendar types of spreads trades on the VIX itself. Only vertical spreads/butterfly types of trades for us. The new trades in the VIX are shown below:
Buy to open: VIX Sep 18th (monthly) 16.00 strike call
Sell to open: VIX Sep 18th (monthly) 19.00 strike call
Debit: 0.59
Max risk = 0.59 or $59.00 per spread
Max reward = 2.41 or $241.00 per spread
Buy to open: VIX Sep 18th (monthly) 16.00 strike call (ratio of 1)
Sell to open: VIX Sep 18th (monthly) 20.00 strike call (ratio of 2)
Buy to open: VIX Sep 18th (monthly) 24.00 strike call (ratio of 1)
Debit: 0.37
Max risk = 0.37 or $37.00 per spread
Max reward = 3.63 or $363.00 per spread
Have a great week!