The equities markets are slipping and the CBOE Market Volatility Index, along with VIX-related exchange traded products, is spiking as traders try to hedge a number of risk events ahead.
On Monday, the REX VolMAXX Long VIX Weekly Futures Strategy ETF (BATS: VMAX) surged 9.6%, iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) jumped 9.2% and ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY) increased 9.2%. Over the past week, VMAX gained 14.1%, VXX was up 10.5% and VIXY rose 10.6%.
Meanwhile, the VIX spiked 17.1% Monday to 19.94, a three-month high. The index also broke above its 200-day simple moving average.
The VIX, or so-called fear index, is a widely observed indicator for investor sentiment in the stock market and measures the expected or implied volatility of large-cap stock options traded on the S&P 500 index. Exchange traded products that track VIX futures allow investors to profit during rising volatility or hedge against short-term turns.
The volatility index is advancing as investors looked to the scheduled Federal Reserve meeting and the upcoming United Kingdom’s so-called Brexit vote to leave the European Union, which is gaining traction. The latest poll released by The Guardian showed a gain in the “leave” camp over the “remain.”
Many market observers are also growing anxious over the market outlook. For instance, Goldman Sachs’ equity strategist Christian Mueller-Glissmann recently outlined the firm’s fears that there may be significant risk to the downside, Business Insider reports.