VIX Volatility Index pulls back sharply on Tuesday as stocks stage large relief rally.
The CBOE VIX (NYSEARCA:VXX) declined sharply on Tuesday after a planned tariff hike on several categories of Chinese goods was delayed, sending stock prices higher.
The Chicago Board Options Exchange (CBOE) Volatility Index, commonly known as the VIX, reached a session low of 17.55 on a scale of 1-100 where 20-25 represents the historic average. VIX would eventually settle down 13.9% at 18.15.
In stocks, the large-cap S&P 500 Index (NYSEARCA:SPY) advanced 1.4% on Tuesday.
ProShares Short VIX Short-Term Futures (SVXY) to track the inverse daily performance of the S&P 500 VIX Short Term Futures Index. SVXY advanced 3.5%.
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 declined 11.2%.
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 declined 14.5%.
The Final Word: Although stocks may have rebounded on Tuesday, volatility in the bond markets could sway investors away from riskier assets. Negative yields around the world are setting a dangerous precedent for government bonds.