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Do You Know How to Trade the VIX?

Here's a primer on the VIX products

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CBOE S&P 500 3-Month Volatility Index (VXV)


The CBOE S&P 500 3-Month Volatility Index (CBOE:VXV) is the “new” formula VIX, but for an option with perpetual 90 days duration. The longer the duration of an option, the “stickier” implied volatility is. As such, VXV does not see the swings of the shorter-dated VIX. In fact, 90 days is a nice look at market assumptions about “mean” volatility.

VXV is a bit interesting now in that it has matched the lift in the VIX, indicating the market now considers current volatility levels somewhat normal.

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