The CBOE VIX Volatility Index surges to three-month high.
The CBOE VIX (NYSEARCA:VXX) spiked on Thursday, as stocks headed for their biggest one-day drop since April.
The Chicago Board Options Exchange (CBOE) Volatility Index spiked 44.4% to 16.04. That was the index’s highest settlement since April.
The gains pushed volatility well into overbought levels, according to the Relative Strength Index. The MACD has also turned sharply higher, which implies renewed upside for the VIX.
The S&P 500 Index (NYSEARCA:SPY) plunged 1.5% on Thursday.
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 13.6%.
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 13.5%.
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 advanced 26.9%.
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 26.8%.
The Final Word: North Korea tensions have brought volatility back into the picture amid a historically challenging stretch for US stocks. Risk aversion is expected to linger for the foreseeable future as Washington and Pyongyang up their military rhetoric.