CBOE VIX Volatility Index declines for second straight session as stocks recover.
The CBOE VIX (NYSEARCA:VXX) declined sharply on Friday, helping to offset a large rally earlier in the week, as risk appetite returned to the financial markets in the form of a relief rally.
The Chicago Board Options Exchange (CBOE) Volatility Index plunged 17.9% to 12.04, partially reversing big gains earlier in the week. The so-called “fear index” continues to trade well below its historic mean, which bodes well for the Trump rally.
The large-cap S&P 500 Index (NYSEARCA:SPY) rose 0.5% on Friday.
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 declined 7%.
VelocityShares Daily Inverse VIX Short Term Futures ETN: (NYSEARCA:XIV) Designed to track the inverse daily performance of the S&P 500 VIX Short Term Futures Index. XIV advanced 6.4%.
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 declined 14.4%.
VelocityShares Daily Short Term VIX 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 14.4%.
The Final Word: Volatility continues to hover well below its historic average, signaling renewed confidence in the Trump rally. However, significant political risks will likely present a challenge for further rallies.