VIX ETFs Fall Off Own Fiscal Cliff
VIX ETFs fell further today after President Obama and Speaker Boehner spoke of possible fiscal cliff resolution
VIX ETFs fell further today after President Obama and Speak Boehner suggested that a fiscal cliff deal would soon be reached, thus eliminating some fear surrounding the possible demise of the US financial system. The VIX Index dropped 2.58% to close at ’15.51,’ the iPath S&P VIX Short Term Futures ETN (NYSEARCA:VXX) dropped 3.03%, and the VelocityShares Inverse VIX ETN (NYSEARCA:XIV) gained 2.82%.
VIX ETFs will likely continue to fall so long as it looks like Capitol Hill will come to a deal to avoid the fiscal cliff, which is now 33 days away. Lawmakers from both sides of the aisle have expressed interest in resolving the fiscal cliff crisis by Christmas, providing some relief for investors. Making money on fear however will likely not be an option if the fiscal cliff is resolved, but be wary of VIX losses if Congress does indeed throw us off of the fiscal cliff.
From a technical perspective, the VIX has a declining MACD and RSI and has again dipped below its 50 Day Moving Average, so fear is definitely appearing to be bearish right now.
Volatility Index – New Methodology (VIX): Index: 15.51, -2.58%
iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX): -3.03%, 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. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets. The iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) prices itself off of the average and implied volatility of the first two months of futures contracts of the S&P 500 Index.
VelocityShares Daily 2X VIX Short-Term ETN (NYSEARCA:TVIX): -5.72%, 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. The S&P 500 VIX Short-Term Futures Index measures the volatility of the S&P 500 Index via futures contracts as traded on the CBOE. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets.
iPath S&P 500 VIX Mid-Term Futures ETN (NYSEARCA:VXZ): -1.51%, This ETN is designed to track volatility in the markets as measured by the CBOE Volatility Index futures contracts. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets. The iPath S&P 500 VIX Mid-Term Futures ETN (NYSEARCA:VXZ) is priced from the average volatility of the 4th through 7th month futures contracts of the S&P 500 Index as traded on the CBOE.
S&P 500 Dynamic VIX ETN (NYSEARCA:XVZ): -.30%, This ETN is designed to track volatility in the markets as measured by the S&P 500 Dynamic VIX Futures Total Return Index. The S&P 500 Dynamic VIX Futures Total Return Index seeks to combine results of volatility of the S&P 500VIX Short-Term Futures Index Excess Return and the S&P 500 VIX Mid-Term Futures Index Excess Return to create an accurate market volatility reading, as measured by the CBOE. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets.
Velocity Shares Daily Inverse VIX Short-Term ETN (NYSEARCA:XIV): +2.82%, This ETN is designed to inversely track the volatility in the markets as measured by the S&P 500 VIX Short-Term Futures Index. The S&P 500 VIX Short-Term Futures Index measures the volatility of the S&P 500 Index via futures contracts traded on the CBOE. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets.
Bottom Line: The VIX Index and VIX ETFs might fall off their own fiscal cliff if Congress averts the fiscal cliff crisis. With more hope from investors emerging today after President Obama and Speaker Boehner spoke, the VIX inched ever closer to falling off the ledge.
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