Geopolitics trigger sharp rise in volatility as stocks struggled for gains.
The CBOE VIX (NYSEARCA:VXX) surged on Wednesday but settled well off session highs, as equity markets struggled with geopolitical tensions between the United States and North Korea.
The Chicago Board Options Exchange (CBOE) Volatility Index touched a session high of 12.63. It would later pare gains, closing up 1.4% at 11.11.
Volatility has been on the rise in recent days, but remains well below its historic trading range.
The large-cap S&P 500 Index (NYSEARCA:SPY) pared losses to finish virtually flat 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 2.4%.
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 declined 2.6%.
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 5%.
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 advanced 4.9%.
The Final Word: Geopolitical risks are giving investors a lot to be concerned about. It seems clear that the Trump administration is trying to contain North Korea, which has successfully test launched an intercontinental ballistic missile