An exchange traded note that has garnered significant attention over the past two months due to the spike in the CBOE Volatility Index on the equity market sell-off that began in August is VelocityShares Daily 2X VIX Short-Term ETN (NYSEArca: TVIX).
TVIX is designed to track the S&P 500 VIX Short Term Futures Index on a two times daily “long” basis.
It is important for investors to recognize that TVIX does not track the spot VIX, and thus like other volatility linked ETNs and ETFs, it does not move in lockstep with the VIX itself.
However, TVIX has been utilized for both hedging purposes and short term directional trading reasons by institutional managers whom want to make plays on volatility.
After seeing impressive inflows in the early to middle part of the summer, the ETN has recently experienced outflows, which is consistent with the largely bearish options activity we have seen in both VIX options as well as in iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) as investors have taken profits into the recent volatility surge and/or are peeling out of their volatility hedges.
VelocityShares Daily 2X VIX Short-Term ETN (NYSEArca: TVIX)
Chart source: StockCharts.com.
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