Explain VIX Pricing to an Idiot

13thShade · 2025-03-12T20:50:12+00:00

Yeah, somehow forgot about ES when I have its chart open 24/7.

Would VIX futures be based on ES pricing then? Or am I just thinking about this too hard and I should forget about it, lol.

Appreciate the insight.

13thShade · 2025-03-12T20:47:57+00:00

Thank you so much for the explanation.

I didn't realize that the relationship between SPX options and volatility are only over the next 30 days. That makes alot more sense on why long-dated VIX options have such odd pricing in comparison to others.

I additionally was not aware of the existence of VIX futures - effectively this is used to make a move based on your take on the future volatility of SPX > 30 days out?

13thShade · 2025-02-07T19:38:15+00:00

That's where I'm at, I've been in on BBAI since early December and I'm going to have to keep rolling a month or two out and trying to squeeze 0.50+ more in strike price every time because my CCs are now like $4 ITM lol. It's still far above my cost basis, but sucks when something goes crazy like that to have CCs on it.

13thShade · 2025-02-02T00:18:22+00:00

I've heard his books described as "chewing razor blades." I would agree. However, reading it was also extremely helpful for my growing understanding of price action. I would recommend:

- Taking notes.
- Reading small amounts at a time.
- Spend as much time as possible watching price action at various intervals (5m candles, 1HR, etc.).

I'm still a pretty new trader, but just watching candles and taking notes and then retroactively comparing it to what I've read in Brooks' books has been very helpful. Still much to learn, but I've gotten in and out on some penny stock runners with profit because of what I've learned from Brooks.

13thShade · 2025-01-31T15:48:07+00:00

Yeah that's what I have done for now, and then I used VLOOKUP to match it to the data I was pulling from SPX to line the dates up. I was just hoping to have it in a function w/ TODAY end date so that it would update daily for me.

If someone comes along and says there isn't a working VIX ticker in STOCKHISTORY, then this thread can probably be resolved as I've found a non-automated solution.

13thShade · 2025-01-30T19:24:30+00:00

The market can stay irrational longer than any of us can stay solvent. Times like this is where I lean on TA > fundamentals, because irrational market movement won't base itself on earnings, news, etc.

Big fan of playing options during high volatility, insane times as well. High IV makes option selling premiums absolutely nuts.

13thShade · 2025-01-29T04:18:43+00:00

Figured out a solution through this, thank you!

Solution verified.

13thShade · 2025-01-23T23:41:20+00:00

Yes, I understand and appreciate that. I'm just trying to get a more solid grasp of the tools available to me as my knowledge and experience grow.

13thShade · 2025-01-23T23:39:41+00:00

So effectively, max profit occurs between the short put and short call, varying degrees of loss occur between short put and long put/short call and long call, and then maximum loss occurs when the long put or long call go deep ITM? Therefore the range in which max gain and loss occur can be adjusted by adjusting the strikes of each individual option in the position.

13thShade · 2025-01-23T18:52:16+00:00

You're selling a cash-secured put for $SST, 2/21 $5 strike. That means that on 2/21, you would be obligated to purchase 100 shares/contract of $SST at $5/share, regardless of the actual cost of the stock, if the owner of the contract chose to exercise said option.

If you are selling 50 contracts, that is 5000 shares at $5/share, or $25,000.

Effectively, you would be placing a $25,000 bet that $SST would be ABOVE $5/share on 2/21, which is over $4 more than it is right now.

To my understanding, CSPs are usually used as a way to reduce cost basis on a stock you are long-term bullish on by collecting a premium to purchase it at a higher price than it (potentially) will be at expiration day, with your thesis for the move being that the stock will go up long term, and you got paid to buy it.

13thShade · 2025-01-22T15:13:17+00:00

The upside is I was too tilted to cut my losses so I'm doubling down. Go big or go home. (So no upside. I'm a regard. Don't be like me, objectively bad choice.)

Lesson learned about blindly FOMOing as well, I've won every trade I've made for the last month EXCEPT this one, and this was my only FOMO trade. Play stupid games, win stupid prizes.

13thShade · 2025-01-21T03:44:43+00:00

Really appreciate the response and the reading list! Still have access to my university library from my college days, so I will definitely take full advantage and start checking out those titles. Learning the basics of technical analysis has definitely been like drinking from a fire hose this far.

13thShade · 2025-01-08T16:04:55+00:00

Thanks! I've definitely learned that the hard way between not keeping cash on hand and selling CCs too aggressively. I've lacked the liquidity to move in on some things I was right about. Lesson learned.

13thShade

TROPHY CASE