Continued Volatility Expected In The VIX ETN (VXX)
“The heat came early this year, and even the thermometers in the normally cool Berkshires were spiking to 100 degrees in May. Stock markets heated up as well, as Greece brought European markets to a boil and scorched the euro. With Iceland’s government warning that the eruption of another volcano, Katla, may be imminent, financial reform about to be voted on in Congress and a high level of volatility in the markets, it looks like it will stay hot for a while,” Don Dion Reports From The Street.
Dion goes on to say, “Investors were skittish in May. The issues facing Europe and Asia weighed on the minds of people around the globe, causing many to flee the market in fear. This type of scenario proved ideal for exchange-traded products designed to track the VIX. During this past month, the iPath S&P 500 VIX Short Term Futures ETN(NYSE:VXX) saw an impressive rally, breaking through its 50-day moving average before testing its 200-day levels.”
“With Spain becoming the center of attention in the ongoing euro crisis, it’s likely that investors will stay nervous well into the summer. VXX’s single-day movements throughout the ordeal will be exciting to watch, and most investors should do just that, since playing with this ETN is likely to burn a hole in your portfolio,” Dion Reports.
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Some suggest the ETN is volatile and may hurt investors but as John Spence said recently, “The iPath S&P 500 VIX Short-Term Futures ETN has rallied more than 60% so far in May on the recent market turmoil.” Which seems to keep investors going back for more.
Here are some more details we have put together on the iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX) below:
iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX)
The investment seeks to replicate, net of expenses, the S&P 500 VIX Short-Term Futures Total Return Index. The index offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects the implied volatility of the S&P 500 index at various points along the volatility forward curve. The index futures roll continuously throughout each month from the first month VIX futures contract into the second month VIX futures contract.
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