VIX Daily Update: Volatility Plunges for Second Day as Brexit Fears Ease
VIX Volatility Index declines for second day as investors await Brexit clarity.
VIX (NYSEARCA:VXX) plunged on Wednesday to reach its lowest level in three weeks, as US stocks followed their global counterparts higher in the latest sign investors were already looking past Brexit.
The Chicago Board Options Exchange (CBOE) Volatility Index (NYSEARCA:VXX), a measure of implied volatility in S&P 500 Index options, fell 11.3% to settle at 16.64. The so-called “investor fear index” declined sharply in the previous session as Wall Street mounted a post-Brexit recovery.
The decline pushed XIV sharply higher. The inverse volatility gauge rose 4.8% to 24.33. Its short-term outlook has improved somewhat, although the underlying trend remains largely negative based on the MACD and RSI.
The large-cap S&P 500 Index (NYSEARCA:SPY) finished up 1.7% 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 declined 5.5%.
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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 4.8%.
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 11.6%.
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 10.9%.
The Final Word: The recent decline in volatility has brought a semblance of calm back to the financial markets. Whether that continues will depend largely on Britain’s timeline for exiting the European Union.