A new trend in the VIX fund
Chris McKhann | email@example.com
The iPath S&P 500 VIX Short-Term Futures Fund has dropped steadily since its inception, but that might be turning around.
Despite doubling in the last month, it is still down 90 percent from its inception date since being launched in early 2009. This is largely because the fund owns the two front-month futures on the VIX, which until recently were in contango. That means each month it had to roll to a more expensive contract, and was thus continuously selling low and buying higher.
But for the last several weeks the term structure of the VIX futures has inverted to backwardation, as it sometimes does during periods of high volatility. So not only is volatility rising, but the structure of the fund is also helping because it's buying low and selling high.
Anything that doubles in short order is a dangerous short. So as long as the VIX term structure remains in backwardation, it is far better to be long the VXX or at least get out of the way.
Big trade bets on floor in volatility
March 4, 2014
Volatility is tumbling with this morning's rebound in the markets, but a large trade is betting that the iPath S&P 500 VIX Futures Note won't fall much further.
Trade sees floor in volatility note
March 3, 2014
A large trader is betting on a floor in the iPath S&P 500 VIX Short-Term Futures Note, whose valuation has been cut in half over the last year.
Huge bet on spike in volatility note
February 27, 2014
A large trader bought 30,000 calls in the iPath S&P 500 VIX Short-Term Futures Note yesterday, looking for it to spike higher in coming weeks.
Trader bets VXX will keep falling
February 12, 2014
A large trade is looking for the long-term downtrend to continue in the iPath S&P 500 VIX Short-Term Futures Note, which has been falling along with the volatility index.
Midday index, ETF option volumes
February 10, 2014
After last week's heavy trading, total option volume is below average at 4.7 million contracts so far today, led by the typical indexes and ETFs, according to optionMONSTER data systems.