Understanding VIX Options Expiration
The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) is a widely used measure of implied volatility in the S&P 500 index. VIX options are a way to trade on the expected future volatility of the S&P 500. VIX options expire on the third Friday of each month, with the exception of March, June, September, and December, which expire on the third Wednesday of the month.
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Importance of Expiration Dates
The expiration date of a VIX option is important because it determines the last day on which the option can be exercised. If an option is not exercised before the expiration date, it will expire worthless. The expiration date also affects the premium of an option. Options that are closer to expiration will have a lower premium than options that are further from expiration.
Calculating Expiration Dates
The expiration date of a VIX option can be calculated using the following formula:
Expiration Date = Third Friday of the month (or third Wednesday for March, June, September, and December) + 30 days
For example, the expiration date of a VIX option that is traded on January 15, 2023 would be February 17, 2023 (the third Friday of the month).
Trading VIX Options
VIX options can be traded on the CBOE. VIX options are available for a variety of strike prices and expiration dates. When trading VIX options, it is important to consider the following factors:
- The current level of the VIX: The current level of the VIX will affect the premium of VIX options. Options that are closer to the current level of the VIX will have a lower premium than options that are further from the current level of the VIX.
- The expected volatility of the S&P 500: The expected volatility of the S&P 500 will also affect the premium of VIX options. Options that are closer to the expected volatility of the S&P 500 will have a lower premium than options that are further from the expected volatility of the S&P 500.
- The expiration date of the option: The expiration date of the option will also affect the premium of the option. Options that are closer to expiration will have a lower premium than options that are further from expiration.
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When Do Vix Options Expire For Trading
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Conclusion
VIX options are a way to trade on the expected future volatility of the S&P 500. VIX options expire on the third Friday of each month, with the exception of March, June, September, and December, which expire on the third Wednesday of the month. When trading VIX options, it is important to consider the current level of the VIX, the expected volatility of the S&P 500, and the expiration date of the option.
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