Eurex: Volatility Trading Through The End Of The Post-Brexit Transition Period

The Brexit process continues with the next big deadline coming on December 31 when the post-Brexit transition period comes to an end. There is a lot of uncertainty as to what the end of this temporary normalcy will bring. The financial impact of moving to the next phase of Brexit will be felt most in Europe and no other index will reflect the market’s concerns or relief associated with this process than VSTOXX®. Trading VSTOXX® futures and options through the end of the post-Brexit transition period will offer up opportunities for those expecting elevated volatility to drop with a smooth transition or if the end of the transition period will bring more uncertainty and an increase in VSTOXX®.

Smooth Transition

One interesting characteristic of the VSTOXX® curve is how flat the shape is over the first seven months of 2021. Based on November 30 closing prices, the range of settlement prices for the seven active 2021 contracts is a historically narrow 0.50.

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