The CBOE Volatility Index (VIX) is a measure of the market’s expectation of volatility over the next 30 days. It is constructed using the implied volatilities of S&P 500 index options. The VIX is often referred to as the “fear gauge” because it tends to rise when the market is expecting a decline in stock prices.
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How To Profit From Vix Trading Videos
How to Trade the VIX
There are several ways to trade the VIX. The most common way is to buy or sell VIX futures contracts. VIX futures contracts are traded on the CBOE Futures Exchange (CFE). Each contract represents 1,000 times the VIX index.
How to Get Started with VIX Trading
To start trading VIX futures contracts, you will need a brokerage account that is approved to trade futures contracts. You will also need to have a margin account, as VIX futures contracts are margined securities. You also need to complete and pass the Series 3 exam with FINRA.
The Benefits of Trading VIX
There are several benefits to trading VIX futures contracts. First, VIX futures contracts are a liquid market, which means that there is always a ready buyer or seller for your contracts. Second, VIX futures contracts are a leveraged product, which means that you can control a large position with a relatively small amount of capital. Third, VIX futures contracts can be used to hedge against the risk of a market decline.
The Risks of Trading VIX
There are also several risks associated with trading VIX futures contracts. First, VIX futures contracts are a volatile product, which means that the price can move quickly and significantly. Second, VIX futures contracts are a leveraged product, which means that you can lose more money than you invested. Third, VIX futures contracts are margined securities, which means that you can be required to post additional margin if the market moves against you.
Conclusion
VIX futures contracts can be a profitable trading vehicle, but they are also a risky product. It is important to understand the risks involved before you start trading VIX futures contracts.
