Hey, You Can Trade Options on VXX Now!

• Posted by Adam Warner
• on May 28th, 2010

OK, let’s go throw a chain here.

SPX options are a derivative of the S&P 500 index. The VIX is a calculation based on one variable in SPX options pricing, volatility.

VIX futures are a derivative of that, a trading product based on a statistical calculation. So it’s a derivative based on a statistic calculated via the pricing of a derivative.

VXX is an ETN that simulates a normalized 30 day VIX future, so it’s a derivative of a derivative based on  statistic calculated via the priciing of a derivative.

VXX options are a derviative of that,

So in sum, VXX options are a derivative of a derivative (VXX) of a derivative (VIX futures)  based on a statistic (VIX) calculated via the pricing of a derivative (SPX options).

There’s only one trader in America that will get a handle on these.

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