General Securities Representative (Series 7) Practice Exam

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When do VIX options expire?

First Friday of the month
Wednesday 30 days before the third Friday of the next calendar month
Last day of the month
Third Wednesday of each month

The correct answer is: Wednesday 30 days before the third Friday of the next calendar month

VIX options expire on Wednesday, which is 30 days before the third Friday of the next calendar month. This specific expiration date aligns with the way the VIX index is calculated and reported, which focuses on expected volatility over the next 30 days. The VIX, or Volatility Index, is an index that represents market expectations of near-term volatility, and its options are strategically designed to expire at a point that reflects the underlying market conditions. This structure allows traders to effectively hedge against market volatility, as the expiration aligns with the VIX's underlying methodology. Understanding this timing is essential for traders dealing with options relating to market volatility. The other timing options presented do not correspond to the standard expiration protocol for VIX options.