The Dow Jones Industrial Average ended Friday’s trading session with a sleigh ride of volatility following a 400-point loss, effectively putting the Dow in the red 9.20 percent year-to-date. The S&P 500 is also down 9.61 percent, while the Nasdaq Composite has shed 8.26 percent through Friday’s session.
Following the interest rate hike on Wednesday by the Federal Reserve, the hopes for a Santa Claus rally were squashed.
“Buyers are just sitting back and instead of playing an oversold bounce, they’re just waiting,” said Scott Redler of T3Live.com. “Anybody’s that tried to position for a Santa rally has been absolutely run over. The calendar issues have been all off.”
The losses have been a recurring theme for U.S. equities, but three exchange-traded products (ETPs) have been benefitting from the increased bouts of volatility.
1. VelocityShares VIX ST ETN (NasdaqGM: VIIX): up 60.61 percent YTD
VIIX seeks to replicate the return of the daily performance of the S&P 500 VIX Short-Term Futures index. The index was designed to provide investors with exposure to one or more maturities of futures contracts on the VIX, which reflects implied volatility of the S&P 500 Index at various points along the volatility forward curve. The calculation of the VIX is based on prices of put and call options on the S&P 500 Index. The ETNs are linked to the daily return of the index and do not represent an investment in the VIX.
2. iPath S&P 500 VIX ST Futures ETN (NYSEArca: VXX): up 60.28 percent YTD
VXX seeks to provide investors with exposure to the S&P 500 VIX Short-Term Futures™ Index Total Return. The S&P 500 VIX Short-Term Futures™ Index Total Return (the “index”) is designed to provide access to equity market volatility through CBOE Volatility Index® futures. The index offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects the implied volatility of the S&P 500® at various points along the volatility forward curve.
3. ProShares VIX Short-Term Futures (NYSEArca: VIXY): up 59.44 percent YTD
VIXY seeks results (before fees and expenses) that, both for a single day and over time, match the performance of the S&P 500 VIX Short-Term Futures Index for a single day. The index seeks to offer exposure to market volatility through publicly traded futures markets and is designed to measure the return from a rolling long position in the first and second month VIX futures contracts.