For day traders, the launch of triple ETFs ushered in a new era of highly liquid trading vehicles with narrow bid-ask spreads and exceptionally high intraday volatility. When FINRA (Financial Industry Regulatory Authority) implemented more stringent margin requirements for leveraged ETFs back on December 1, 2009, some of the luster came off of these products, particularly for the day trading crowd.   

With the launch of the fully margin-able iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX) earlier in 2009, I thought it was just a matter of time before (NYSE:VXX) became part of that elite group of nitroglycerin-fueled rocket pairs that were led by Direxion Daily Financial Bull 3X Shares (NYSE:FAS) and Direxion Daily Financial Bear 3X Shares (NYSE:FAZ) and supported by Direxion Daily Small Cap Bull 3X Shares (NYSE:TNA) and Direxion Daily Small Cap Bear 3X Shares (NYSE:TZA). Sure enough, interest in (NYSE:VXX) surged in December 2009 and by January the ETN was eclipsing the daily volume of all but (NYSE:FAS) and (NYSE:FAZ).   

One of the factors that held back (NYSE:VXX) as a day trading vehicle was the absence of an inverse pair that would make it easier to go long and short volatility without having to short (NYSE:VXX) and deal with “availability to short” issues.   

Today, just two weeks into its life, (NYSE:XXV) – the Barclays ETN+ Inverse S&P 500 VIX Short-Term Futures ETN is proof that (NYSE:VXX) now has a viable inverse counterpart, with bid-ask spreads and liquidity that make it an attractive day trading vehicle. (NYSE:XXV) traded 715,872 shares today, reaching that volume level in one third the time it took to attract the same interest. (NYSE:VXX) took almost four months to reach one million shares in a single session; my guess is that (NYSE:XXV) hits that mark before the week is through.   

While (NYSE:XXV) will likely prove to be more attractive to many investors than shorting (NYSE:VXX), it should be noted that in its first two weeks, (NYSE:XXV) has underperformed a comparable short (NYSE:VXX) position in all but one trading session.   

For more on related subjects, readers are encouraged to check out:   

• XXV and the New VIX ETN Landscape
• VIX Futures Contango Bubble
• Chart of the Week: VXX Celebrates One Year of Futility
• Chart of the Week: VXX vs. VIX
• Why the VXX Is Not a Good Short-Term or Long-Term Play
• VXX Calculations, VIX Futures and Time Decay

Written By Bill Luby From The VIX and More   

Bill is a private investor who also authors the VIX and More (http://vixandmore.blogspot.com/) blog and an investment newsletter from just north of San Francisco. His research and trading interests focus on volatility, market sentiment, technical analysis, and ETFs. Prior to becoming a full-time investor, Bill was a business strategy consultant for two decades and advised clients across a broad range of industries on issues such as strategy formulation, strategy implementation, and metrics. When not trading or blogging, he can often be found running, hiking, and kayaking in Northern California. Bill has a BA from Stanford University and an MBA from Carnegie-Mellon University.   

You may also take a look at our ETF categories for more insight on each ETF below:   

Direxion Daily Financial Bull 3X Shares (NYSE:FAS): Visit the (FAS) category: HERE   

Direxion Daily Financial Bear 3X Shares (NYSE:FAZ): Visit the (FAZ) category: HERE   

Direxion Daily Small Cap Bull 3X Shares (NYSE:TNA): Visit the (TNA) category: HERE   

Direxion Daily Small Cap Bear 3X Shares (NYSE:TZA):  Visit the (TZA) category: HERE   

iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX):  Visit the (VXX) category: HERE   

Barclays ETN+ Inverse S&P 500 VIX Short-Term Futures ETN (NYSE:XXV):  Visit the (XXV) category: HERE

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3. How To Invest In Private Equity Like A Billionaire With ETFs/ETNs (PSP, BDCS, BDCL)
4. Trading ETF Blocks: Why Volume Is Not A Good Indicator Of The Cost Of Trading ETFs

NYSE:FAS, NYSE:FAZ, TNA, TZA, VXX, XXV