VIX Daily Update: Volatility Plunges as Stocks Extend Rally
CBOE VIX Volatility Index approaches record lows as stocks resume uptrend.
The CBOE VIX (NYSEARCA:VXX) declined sharply on Wednesday, as stocks resumed their record-setting pace following the release of last month’s FOMC meeting minutes.
The Chicago Board Options Exchange (CBOE) Volatility Index declined 6.4% to close at 9.15. The index has now declined sharply in two straight sessions, bringing it within half a point of its all-time low.
Measures of relative strength and momentum continue to show weak underlying demand for Vol, which is a positive sign for equities.
The large-cap S&P 500 Index (NYSEARCA:SPY) rose to new records on Wednesday, adding 0.6%.
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 2.1%.
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VelocityShares Daily Inverse VIX Short Term Futures ETN: (NYSEARCA:XIV) to track the inverse daily performance of the S&P 500 VIX Short Term Futures Index. XIV advanced 2.4%.
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 4.3%.
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 4.3%.
The Final Word: Stock markets are in a state of euphoria at the start of the year, as investors continue to shrug off overvaluation risks. It remains to be seen whether the current pace can be maintained or whether volatility will creep back into the picture.