How Does VXX Work?

This post will discuss what VXX is ( full name: iPath S&P Series B S&P 500 VIX Short-Term Futures), how it trades, how its value is established, what it tracks, and how Barclays makes money running it.  VXX has been through some transitions recently.  The original security matured in January 2019 and was replaced by VXXB, which was very similar except for a few items …

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When You Think Your Exchange Traded Fund is Broken…

Frequently I see people complaining that their Exchange Traded Fund (ETF) or Exchange Traded Note (ETN) is broken. Occasionally they’re right, but most of the time they’re not.  Before complaining, here are some things to look at: Are you looking at the right index? All Exchange Traded Products (ETPs) track an index, which is identified in their prospectus, and in the fund’s fact sheet.   Don’t …

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Barclays’ VXXB—Not as Short Term as You Think

In terms of assets Barclays’ “S&P 500 VIX Short-Term Futures” ETN is among the leaders in volatility ETFs with around 500 million dollars under management.   I suspect it’s also one of the leaders in investor confusion. Although VIX is in its formal name VXXB doesn’t actually track the CBOE’s VIX index with any degree of precision. In fact, it’s not unusual for VXXB and VIX to …

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VXX prospectus

You can find Barclays’ VXX prospectus here.  The prospectus covers both the short term VXX, and the medium term VXZ. This post discusses going long on VXX. This post discusses some choices if you think VXX is going to go down. For an estimated date for VXX’s next reverse split see this post. For an overview of how VXX works, see “How Does VXX Work?” …

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Going short on VIX?

Unlike the S&P 500 or Dow Jones Index, there is no way to directly invest in the VIX index.  I’m sure some really smart people have tried to figure out how to go long or short on this computed volatility index, but there’s just no way to do it directly.  Instead, you have to invest in a security that attempts to track VIX.  None of …

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