Volatility Bulls Get Creamed Again as VIX ETF Hits New All-Time Lows

vix-fearThe iPath S&P 500 VIX Short Term Futures TM ETN (NYSE:VXX) closed the week at fresh all-time lows, hit by better-than-expected economic data and the equities rally that ensued.

VXX is an ETF (technically an ETN) launched in 2013 that tracks the VIX — the so-called fear gauge that measures the implied volatility of S&P 500 futures contracts. When traders are fearful of a stock crash, the VIX will spike.

Fear has been almost totally absent in the markets over the past few years, however, and the VIX has paid the price. From the Financial Times:

The Vix index fell to just 11.18 points on Friday — the last time the measure was this low was in the summer of 2014 — and it is close to the all-time record low of below 10 touched before the financial crisis. The gauge shot up to 26.7 points in the wake of the UK’s vote to leave the EU, but has quickly settled back.

Traders say that ultra-aggressive central bank monetary policy has muffled volatility in financial markets and allowed investors to look past a mixed economic backdrop, helping push stock markets higher. The S&P 500 index hit a fresh record high on Friday, both intraday and at the close, while the Nasdaq also closed at a new high.

The VXX closed on Friday at $9.53 per share, down $0.34 (-3.44%) on the day. Year-to-date, VXX has fallen more than 52%, and more than 80% since the ETN’s introduction in November of 2013.


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