When do vix options settle

If you don't agree with any part of this Agreement, please leave the website now. Any information may be inaccurate, incomplete, outdated or plain wrong. Macroption is not liable for any damages resulting from using the content. VIX Options Expiration. Why this complicated expiration rule? The last trading day of VIX options is the business day before, usually Tuesday. Have a question or feedback? Send a message. It takes less than a minute. These levels vary from brokerage to brokerage, so you will have to ask what is required to be long VIX options.

If you are just getting into options trading this is as high as you want to go anyway. Selling naked calls for example, is not something for a rookie to try. No special permissions are required from your broker for VIX options. In general, the same sort of restrictions e. More on that later. The option greeks for VIX options e. Most options chains that brokers provide assume the VIX index is the underlying security for the options, in reality, the appropriate volatility future contract should be used as the underlying.

To compute reasonably accurate greeks yourself go to this post. A big VIX spike will be underrepresented, and likewise, a big drop probably will not be closely tracked.

This is a huge deal. It is very frustrating to predict the behavior of the market, and not be able to cash in on it. The only time the VIX options and VIX are guaranteed to sort-of match is on the morning of expiration—and even then they can be different by a couple of percent.

The VIX options are European exercise. It is common for these options to be trading at levels much different than you would expect for American style, early exercise capable options. The prices only start relating closely to the VIX spot price on the expirations day. The payout is determined by the difference between the strike price and the VRO quotation on the expiration day.

This is the expiration value, not the opening cash VIX on the Wednesday morning of expiration. VIX options expire at market open on expiration day, so expiring options are not tradeable during regular hours on that day.

VIX options do not expire on the same days as equity options. It is almost always on a Wednesday. This odd timing is driven by the needs of a straightforward settlement process. For more on this process see Calculating the VIX—the easy part.

The bid-ask spreads on VIX options tend to be wide. If you have time start halfway between the bid-ask and increment your way towards the more expensive side for you.