Long Volatility ETFs Destroyed As Stocks Continue Early Year Rally

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January 4, 2017 7:22pm NYSE:UVXY

volatility vix

Analyst Paul Weisbruch of Street One Financial in his daily fund flows update points out continued weakness in volatility-based ETFs, several of which hit new all-time lows today amid bullish equities action.


On Tuesday, some volume returned to the ETF markets, on the first day of the trading year model changes across the marketplace, as we saw certain U.S. sector ETFs trade large multiples of their typical daily volumes. We will likely see accompanying inflows and outflows hit the creation/redemption markets in notable size in the next 24-48 hours and we can provide more color on what the “tilts” may look like early this month.

In ETF/Options trading we have not seen a ton of notable activity yet in 2017, and this is very reflective of the VIX itself getting hammered again today (-5%) and related “Long Volatility” ETPs like VXX, UVXY and so forth trading at new all-time lows once again today.

VXX for example has traded with a $22 handle for the first time ever in early trading today. We do have to note once again that the VIX itself is far from trading at all-time lows though (the contango effect in the futures market once again is penalizing the Long Vol ETPs), trading with a $12 handle still.

The ProShares Trust Ultra VIX Short Term Futures ETF (NYSE:UVXY) closed at $6.73 per share on Tuesday, down $0.77 (-10.27%). Over the past year, UVXY has declined -95.25%, versus a 12.29% rise in the benchmark S&P 500 index during the same period.

UVXY currently has an ETF Daily News SMART Grade of F (Strong Sell), and is ranked #2 of 3 ETFs in the Leveraged Volatility ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.


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