Comment on Trading India VIX - Simplified

Manish Raghuvanshi commented on 06 Mar 2014, 05:14 PM

Nitin Thanks for very well explanation…
Off lately as Election Commission has announced the elections dates and RESULT day, most of us must be thinking how to use VIX or any other trading instruments during the election.
There are few trading instrument I am considering to use- VIX Futures, Nifty Futures & Options and Bank Nifty Future & Options.
Now question arises…which one is best? Let us see one by one

1) VIX- There is no doubt that VIX is going to hit high high on Election result day!! So one can consider buying of VIX at least one week before the election result announcement. Since these contracts expire weekly one has no option than buying the nearest week expiry! But I am not sure if we can square it off on the Election Day as there may many circuit filters!!! Squaring off next day which will be Monday may result in loss if VIX goes down sharply. But I assume the VIX will remain high for at least some time.

2) Nifty Future or Options: Of course options…now when to buy options? One week before election result or two weeks before? I assume VIX is going to increase a lot from beginning of April and one has to time buying the options at right time. Any past experience from GURUS?

3) Bank Nifty Future or Option: Bank Nifty options may be very expensive and may not be as liquid as Nifty Options….Any idea??? In this case we may go for BankNifty futures but this will be a directional bet as you can’t buy and seel at the same time!!Given all this Banknifty still remains lucrative as it is going to zoom more than Nifty

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