Bearish Options Bets Pour In Against VXX Volatility ETN

Analyst Paul Weisbruch of Street One Financial brings us his daily fund flows update, which today points out continued inflows to the SPY prior to Apple’s earnings report, and some bearish bets on a much-maligned VIX ETN.

AAPL Earnings Have Outsized Effects

This week’s biggest takeaway thus far has been the sizable inflows into SPY (over $8 billion in) ahead of AAPL’s earnings (which reported last night after the bell), and the stock is rallying over 5.6% this morning. That’s an unparalleled move for the stock, due to its massive size and wide shareholder base.

AAPL of course is the largest weighting in the SPX (3.13%) and carries a 10.66% weighting in the NDX, where it is also of course the heaviest weighting.

Bearish VIX ETN Bets Pour In

In options trading we have seen some bearish looking trading in VXX (iPath S&P 500 VIX Short-Term Futures ETN) ahead of today’s significant pullback there. Specifically the February 20 puts were bought on the very brief VXX rally in the past two days (on extremely heavy trading volume for the product) as it is presently trading at yet another new all-time product low after AAPL’s earnings. We note however that the VIX itself is still well above $11, far above its recent intraday low of $10.30 registered four trading sessions ago.

The iPath S&P 500 VIX Short Term Futures TM ETN (NYSE:VXX) was trading at $19.17 per share on Wednesday morning, down $0.25 (-1.29%). Year-to-date, VXX has declined -24.85%, versus a 1.74% rise in the benchmark S&P 500 index during the same period.

VXX currently has an ETF Daily News SMART Grade of F (Strong Sell), and is ranked #3 of 10 ETFs in the Volatility ETFs category.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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