Posted on Tuesday, December 18th, 2012 | In Exchange Traded Funds
VIX ETFs get crushed on Tuesday by hope for fiscal cliff, fall to recent lows
VIX ETFs and the VIX Index fell sharply today as Congress and the White House continued sparring over the fiscal cliff and how to resolve their differences. Read “ETF Investing For The Fiscal Cliff”
Stocks and ETFs rose sharply as hope for a deal grew, and, as usual, VIX and VIX ETFs moved opposite and so declined for the day.
VIX, the CBOE S&P 500 Volatility Index, also known as the fear index, fell 4.71% to close at 15.57, well below its long term average of 20 and below both its 50 and 200 day moving averages.
iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX): -3.88%, This ETN is designed to track volatility in the markets as measured by the Chicago Board Options Exchange Market Volatility Index (CBOE Index), a popular measure of the implied volatility of S&P 500 index options.
VelocityShares Daily 2X VIX Short-Term ETN (NYSEARCA:TVIX): -8.45%, This ETN is designed to track 2X return on volatility in the markets as measured by the S&P 500 VIX Short-Term Futures Index.
iPath S&P 500 VIX Mid-Term Futures ETN (NYSEARCA:VXZ): -2.75%, This ETN is designed to track volatility in the markets as measured by the CBOE Volatility Index futures contracts.
S&P 500 Dynamic VIX ETF (NYSEARCA:XVZ): -1.26%, This ETN is designed to track volatility in the markets as measured by the S&P 500 Dynamic VIX Futures Total Return Index.
Velocity Shares Daily Inverse VIX Short-Term ETN (NYSEARCA:XIV): +3.73%, This ETN is designed to inversely track the volatility in the markets as measured by the S&P 500 VIX Short-Term Futures Index.
Bottom Line: Complacency rules as VIX ETF investors bet on higher equity prices and lower VIX ETF prices ahead. Should they be wrong, a significant spike in VIX and VIX ETFs could be expected.
About John Nyaradi (http://www.wallstreetsectorselector.com)
John Nyaradi is Publisher of Wall Street Sector Selector: Your Home For ETF Investing! John writes a weekly guest column, John Nyaradi’s ETF Edge for MarketWatch.com and his investment articles have appeared in many online publications including Trading Markets, Money Show, Yahoo Finance, Investors Insight, Fidelity, ETF Daily News, iStock Analyst , among many others. His book, Super Sectors: How to Outsmart the Market Using Sector Rotation and ETFs, is published by John Wiley and Sons and included among the Years Top Investment Books in the 2011 Stock Trader’s Almanac.