CBOE VIX Volatility Index rises sharply as stock selloff continues.
The CBOE VIX (NYSEARCA:VXX) spiked on Wednesday, reaching its highest level in six months as government bond yields pressured stocks.
The Chicago Board Options Exchange (CBOE) Volatility Index touched a session high of 21.97, levels not seen since April. The so-called “fear index” settled at 21.77, having gained 36.5%.
Vol’s short-term technical indicators have turned bullish, though the relative strength index (RSI) suggests that the asset is overbought.
In stocks, the large-cap S&P 500 Index (NYSEARCA:SPY) plunged 3.3% on Wednesday.
Major VIX ETFs:
iPath S&P 500 VIX Short Term Futures ETN: (NYSEARCA:VXX) Designed to offer exposure to the S&P 500 VIX Short Term Futures Index Total Return. The Index uses CBOE Volatility Index futures by way of a long position in the first and second month VIX Futures contracts. VXX advanced 16.6%.
ProShares Short VIX Short-Term Futures (SVXY) to track the inverse daily performance of the S&P 500 VIX Short Term Futures Index. SVXY declined 8.4%.
ProShares Ultra Short Term VIX Futures: (NYSEARCA:UVXY) UVXY is designed to deliver 2X (leveraged) returns of the day’s moves in the S&P 500 VIX Short Term Futures Index. It tacks the two front months of the futures contract. UVXY advanced 24.8%.
VelocityShares Daily 2x VIX Short Term Futures ETN (NYSEARCA:TVIX) TVIX is a leveraged VIX ETN designed to deliver 2X the returns of the daily S&P 500 Short Term Futures Index. TVIX advanced 32.8%.
The Final Word: The fear index is approaching 20, levels not seen since April. The inevitable rise in government bond yields could generate higher levels of volatility in the short run as investors cut ties to riskier assets.