CBOE Emerging Market Volatility Feature for Options Profits

This list of VXEEM options is a significant development for those interested in trading options as well as those that have an interest in the futures. VIX futures began trading in 2004 and VIX options were listed in 2006. Volume in the VIX futures really started to pick up after the VIX options were introduced. As market makers use the corresponding VIX futures for hedging purposes when executing an order in the volume in the VIX options increases the liquidity of the VIX futures market. With the rolling out of VXEEM options, there could well be a sudden corresponding increase in VXEEM futures trading.

So keep an eye out for VXEEM options next week along with VXEEM futures volume. A common approach to trade futures on volatility is to be bearish when bullish on the overall stock market. Maybe buying a put on the VXEEM if you are bullish on the EEM is a strategy to consider. If the VXEEM futures are at a premium to the index then you may have an added bonus of the futures contract approaching the price of the index as expiration approaches. Finally, keep an eye out for Mark Sebastian suggesting some VXEEM option trades.

Additional resources to compliment the article:

www.cboe.com/vix

www.cboe.com/vxeem

cfe.cboe.com

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