“In contrast to what many contrarians believe, low VIX levels are not bearish. And high levels are not necessarily bullish either,” Hulbert said.
VXX is the largest volatility exchange traded products with a market cap of about $1.2 billion. The ETN is down about 77% for the trailing year.
“One strange attribute of the stock market over the past year has been the nearly complete lack of volatility. Although the markets haven’t moved straight up, declines have been shallow and short-lived, and despite potential global and domestic catastrophic events, investors have been complacent,” writes Dan Caplinger at the Motley Fool.
He points out that losses in volatility products such as VXX have been magnified by the fact they are designed to track futures rather than the spot VIX.
“Expectations of higher future volatility have been continually thwarted, costing investors additional friction from rolling contracts. If fear returns to the market, then [VXX] will rise, but there’s no guarantee that it’ll get close to quintupling in price — which is what it would need to regain its losses since early 2012,” Caplinger added.
ProShares Ultra VIX Short-Term Futures