The CBOE Volatility Index (VIX) Index , which closed Friday at 12.63 is currently approaching 5-year lows.
It is calculated from the prices of S & P 500 index options.
Investors can speculate in VIX futures or VIX futures options, but understanding the futures "term structure" (how the prices of various futures of different expiration relate to each other) isn't that straightforward.
Consider the following chart of the Barclays iPath S & P 500 (VXX) , an exchange traded note which is intended to track the S & P 500 short-term VIX futures total return index vs. the VIX Index itself.
If one is inclined to make a bullish bet, but is reluctant to get caught "chasing" after the market has already rallied sharply, perhaps we can take advantage of the fact options prices are well below average.
Persons:
VXX
Organizations:
Barclays iPath, Broadcom, Dollar
Locations:
New York City, VXX, SPDR