The number of UVXY shares has increased to almost 50 million from 100,000 at the end of December, and TVIX shares jumped to 80 million from 5.1 million, according to the report. The products are designed to track VIX futures contracts rather than the spot price.
“It’s summer and nobody wants to own volatility,” said Peter Cecchini, global head of institutional equity derivatives at Cantor Fitzgerald LP, in the article. “The macroeconomic backdrop is completely divergent from the VIX and that disconnect is likely to revert.”
Volatility-linked products faced scrutiny earlier this year when TVIX fell sharply when its premium to indicative value narrowed. [What Really Happened with TVIX]
TVIX is down 91.6% year to date, according to Morningstar. The ETN is trading under $3 a share after spiking above $100 last year in a risk-off bout in markets.
VelocityShares Daily 2x VIX Short-Term ETN
Full disclosure: Tom Lydon’s clients own TVIX.