Following the chain of events in the VXX
So, piecing it together from the beginning, I have the following: The S&P 500 Index moves up and down with prices of the shares underlying the index —> Investors buy put and call options on the S&P 500 —> These options provide an implied volatility of the S&P index (i.e. the VIX) —> Futures traders speculate on the future price of the VIX —> ...
More about the VIX and the VXX
What is the VXX? I am going to try to explain to you, as I understand it, in plain English, which will demonstrate why this is a really convoluted product. 1) The VXX is an ETF that tracks an index tied to near term VIX Futures prices. i.e., the index tries to track the movement of VIX Futures. 2) A VIX Futures contract is the price in which buyers and sellers of the contract believe the VIX...
Hedge Fund manager Daniel Loeb's excerpts from his... →
Source: Business Insider
The Vix, or Fear Index - What is it, and is this a...
Technology investing is very volatile. Things can go really well for you, or really, really bad. New technologies emerge to disrupt the status quo. Market leaders fall behind, and new companies emerge with incredible speed. Recently, the equity markets have become increasingly volatile. One way to “manage” volatility is through an ETF called the VXX. After the market went berserk...