New Trade for July 14th 2020

Futures are pointing towards modest gains at the moment. We will see how the day plays out after an ominous reversal yesterday when the euphoric morning rally crumbled in the afternoon.  The Nasdaq 100 traded up by 2% reaching another ATH then dropped precipitously to close down more than 1%. The S&P index fell 29.82 points to close at $3155.57.

The CBOE volatility index (VIX) spiked more than 16% throughout the day yesterday.  A pullback from this level in the very near term could be coming, but we expect that over the next few weeks there will be opportunities to cash in with some volatility plays.  

Our trade alert for today highlights some ETF options for those who want to cash in on these wild market swings.  We’ve included some valuable information for those who  are new to volatility trading.  

Here are a couple of the best ways to play heightened volatility…

ProShares VIX Short-Term Futures ETF (VIXY)

  • 1-Year Trailing Total Return: 137.0%
  • Expense Ratio: 0.87%
  • 3-Month Average Daily Volume: 5.9 M
  • Assets Under Management: $426.7 M
  • Inception Date: January 3, 2011
  • Issuer: ProShares

iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) –  

  • 1-Year Trailing Total Return: 139.2%
  • Expense Ratio: 0.89%
  • 3-Month Average Daily Volume: 59.6 M
  • Assets Under Management: $2.2 B
  • Inception Date: January 17, 2018
  • Issuer: Barclays Capital

Both VIXY and VXX track an index comprised of short-term VIX futures contracts.  

Volatility plays can bring huge profits, fast, which also means higher risk.  We only recommend investing in the volatility index if you are an active investor who can monitor the index closely.  Most volatility investments are only held for a short time.