Analyst/ETF Trader Paul Weisbruch of Street One Financial brings us his daily fund flows update, which today focuses on renewed weakness in long volatility ETPs, along with some hedging taking place for a popular China-focused fund.
With the VIX plunging today amid a relief rally in equities, we see the largest volatility tracking ETP, iPath S&P 500 VIX Short-Term Futures (NYSE:VXX), hanging on a thread at its 50-day MA, a level that it has traded well above for the past three trading sessions.
We have mentioned the substantial inflows that “Inverse Volatility” funds ProShares Short VIX Short-Term Futures (NYSE:SVXY) and VelocityShares Daily Inverse VIX Short Term ETN (NASDAQ:XIV) have experienced recently in well-timed trades ahead of this decline in relative “Vol” levels as well. VXX, in spite of today’s immense weakness, has still attracted net assets in the trailing one month period of over $65 million.
In light and uneventful ETF/Index options trading on the whole, we have seen some bids today in iShares China Large-Cap (NYSE:FXI) September 42.50 puts, which given China’s 1.4% rally today seems to be long holders enacting protection in case of whipsaw trading in the segment.
The iPath S&P 500 VIX Short Term Futures ETN was trading at $12.21 per share on Tuesday morning, down $0.56 (-4.39%). Year-to-date, VXX has declined -52.14%, versus a 10.43% 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 #5 of 12 ETFs in the Volatility ETFs category.