Place butter and marshmallows in a saucepan and cook over low heat, stirring until melted. Remove from heat and stir in vanilla and optional food coloring.
Place popped popcorn in a large bowl. Pour in marshmallow mixture and stir.
To make popcorn balls, grease hands with butter and form popcorn balls about the size of a baseball. Place on wax paper to cool. Serve or store wrapped in plastic wrap.