Well-Timed Options Bets Seen In VXX

Analyst Paul Weisbruch of Street One Financial brings us his daily fund flows report, which today looks at continued investor interest in gold as a potential hedge, as well as some interesting options activity involving a popular volatility ETP.

GLD (SPDR Gold) has seen some additional inflows since we mentioned it, and the Long Gold space in general here yesterday, as the ETF has now reeled in over $1.1 billion year-to-date in terms of new inflows. Options trading on this front has remained quiet, however.

In other activity, we have seen some portfolio managers re-adjusting downside hedges going into April options expiration, which is this coming Friday, and rolling up in some cases to strikes that are closer to-the-money in order to lock in portfolio protection in the event of an early summer swoon in stocks.

Elsewhere, we have seen some very short-term but well timed put activity in VXX (iPath S&P 500 VIX Short-Term Futures ETN) on heavy trading volume and volatility in the underlying, which has lately consisted of April 17.50 puts (now in-the-money). VXX has seen modest inflows YTD (just $97 million in) and has sold off in the past several sessions on a sharp VIX decline.

The iPath S&P 500 VIX Short Term Futures TM ETN (NYSE:VXX) was trading at $17.09 per share on Wednesday afternoon, down $0.12 (-0.70%). Year-to-date, VXX has declined -33.01%, versus a 4.81% rise in the benchmark S&P 500 index during the same period.

VXX currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #2 of 11 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 ETFTrends.com 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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