Trading VIX Futures | Volatility Trading

Cboe VIX futures can be used to gain exposure to changes in S&P 500 implied volatility. However, there are things you need to know before trading VIX futures.

In this video, you'll learn:

1. How VIX futures converge to the VIX Index as their settlement dates approach.

2. How buyers of VIX futures face losses when the VIX term structure is in contango.

3. How sellers of VIX futures face losses when the VIX term structure is in backwardation.

4. The contract multiplier and minimum tick value of a VIX futures contract. tastytrade, Inc. (“tastytrade”) has entered into a Marketing Agreement with Project Finance(Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade and/or any of its affiliated companies. Neither tastytrade nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastytrade does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website. Marketing Agent is independent and is not an affiliate of tastytrade.

[thetradingteenocontact]

I wish You could teach as in-depth with futures as you do with options. So easy to listen to you. It’s like we are having a conversation.

[rrobinslam]

Thanks alot this helped me to understand VIX Futures index vs VIX index prices. Even on CFD contracts you'll pay a premium in contango or discount in backwardation when a new monthly futures contract starts. I didn't know why, now i do.

[irinaostapchuk]

Thank you for clarification. Can you add the technical video of trading futures. Where to see expiration date? Can we close future contract before expiration?

[StevenBenjamin]

Thank you, would you consider explaining how a vx contracts settles?

[patmat.]

oh that's how the VIX is traded ... Thank you ! I'm saving this video.

[absolute___zero]

you didn't tell what is the margin requirement to buy a contract!!! This is very important information.

[Maria-mhjp]

why not just buy/short VIX index funds instead like VXX when betting on direction?

[sathyath]

So in Options lingo:
Futures contracts ~ strike prices
Settlement ~ expiration
Carrying cost ~ extrinsic value
Contango ~ high extrinsic value
Backwardation ~ low extrinsic value

Am I understanding these correctly?

[HefTrade]

What's up Chris, I'm working my way through all of your videos.
First question, Is there a point where contango turns into backwardation or are the two terms just names of how /VX is priced? i.e. 02/2/2020 /VX was around 15 and by 3/19/20 it reached around 55 and around 35 contango turned into backwardation which would make me think 35 would be the most reasonably priced time to buy into /VX.
Second question, is there a quantifiable system similar to deltas when buying options to make decisions to buy futures? I have paper traded futures on TOS but I am not experienced enough to put myself in the hot seat to play with futures just yet.
Congrats on your subscriber growth and as always I appreciated your responses.
-Evan

[ColGadarby]

I was hearing that VIX Futures are better than VIX Options for hedging the SP500. I think I need to stick with VIX Options after watching this.

[joannahuc]

Scary stuff. Thank you for the great explanation.

[chloelee]

Yeah, I earned 3k on VIX in 1 minute and then 30 minutes later, I lost 3k. It's crazy.