iPath S&P 500 VIX Short Term Futures TM ETN (NYSEARCA:VXX) up 4.2%


Dallas, Texas 09/30/2013 (Financialstrend) – iPath S&P 500 VIX Short Term Futures TM ETN (NYSEARCA:VXX) is the largest exchange traded fund (ETF) that provides exposure to the VIX exchange. On September 27, the share price of the ETF went up by 4.26% from its previous day close to reach a 5 day high valuation of $14.31 per share before ending the day at $14.2.

Strong rally

This sudden spike in investor interest can be linked to Barclays Bank announcement of issuance of two senior notes adding up to $2.5 million.  The first batch of accrual notes would raise $1 million and will become due on September 2028. This will be linked to the CMS Spread and Russell 2000 index. The second set of notes issued will raise $1.5 million and will be due in September 2019 and will be linked to the stock market performance of EURO STOXX index.

Underlying weakness

The fund has depreciated by close to 13.8% over the past month and by close to 31% in the past 90 days. Since September 2012, the fund has ceded 61% of its overall stock value. The fund is trading 5.8% above its 52 week low valuation and down 62% from its 52 week high valuation.

FED No Taper decision effect

On the news of September 18 Federal Reserve decision not to initiate tapering of stimulus in the form of bond purchases the, shares prices of this ETF dropped dramatically. This was driven by the disappointment of investors who were hoping for a contrary decision which would have fuelled more volatility. The iPath S&P 500 VIX Short Term Futures ETN was down by 3% on the back of the FED announcement.

VXX aims to provide exposure to equity market volatility to its investors. Its daily trading volume hovers around the 40 million mark. It has a market capitalization $1.4 billion with 102 million shares outstanding.