We have all heard the VIX or volatility index referred to as the Fear Index or Fear Gauge. Rising VIX was meant to signal fear in the markets. That is how most investors have historically thought about VIX and traded it (directly or through Exchange Traded Products).
I have gone back in time and combined the total assets under management of XIV and SVXY (two short VIX products) and UVXY and VXX (the two largest long VIX products). There are others and it doesn't account for the fact that UVXY incorporates leverage, but the point is the same.
Funds - Theory - Investors - Portfolios - Species
The funds that in theory helped investors 'hedge' their portfolios went from being the dominant species to those that enable investors to sell volatility.
This has rarely been the case.
Investors - Interest - Portfolios - Evidence - VIX
Typically investors had more interest in hedging their portfolios despite the evidence that the long VIX ETFs and ETNs had to continually perform reverse splits as their share prices drifted lower (some would argue "raced" lower is a more accurate description).
While the products looking to benefit on a...
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