Update. Barclays’ responded to the problems noted below with their IVOP ETN. It has now has a similar situation that XXV has—near its max price and very low leverage. See this post for more information.
As this Volatility Futures and Options post makes clear, Barclay’s XXV doesn’t have much of a future. Currently at $33, it can’t go higher than $40, a 21% increase from where it is now—regardless of how low VXX goes. After a 50% rise in its first 3 months of existence, this little nova of a fund is doomed to spending the rest of its life in lethargy.
To me XIV, VelocityShares Daily Inverse VIX Short-Term ETN, which tracks the inverse daily returns of VXX, looks like a much better solution if you want to profit from VXX’s contango driven path towards zero.
- XXV: Dancing the contango—without getting mugged
- XXV behavior—it’s a pretty good VXX short
- XXV — VXX negative percentage move or VXX short?
- XXV Prospectus
- Betting that fear will fade