Trade Alert – VIX Short-Term

by | May 1, 2020 | Daily Trade Alert

Here we go again.

After a brief recovery, markets are pulling back. Dow futures are down 460 points. NASDAQ futures dropped 204, with S&P 500 futures down nearly 61. All thanks in part to Trump Administration threats against China.

Earlier today, President Trump said he could block a government retirement fund from investing in Chinese stocks, and to tack on new tariffs over the coronavirus issue. As noted, by Reuters, “The negative sentiment was set by comments from Trump on Thursday that he was concerned about China’s role in the origin and spread of the novel coronavirus and that his trade deal with China was now of secondary importance to the pandemic. He threatened new tariffs on Beijing, as his administration crafted retaliatory measures over the outbreak.”

That’s creating a good deal of fear in the market, and sending volatility higher.

To potentially profit from higher volatility, we can revisit volatility trades that did very well for us, as the last trade war got out of control.

ProShares Ultra VIX Short-Term Futures ETF (UVXY)

As volatility ticks higher with the trade war, ETFs such as the UVXY could run even higher. The ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index.

VelocityShares Daily 2x VIX Short-Term ETN (TVIX)

The TVIX is another great way to trade elevated volatility. This ETF tracks an index of futures contracts on the S&P 500VIX Short-Term Futures Index.

iPath S&P 500 VIX Short-Term Futures (VXX)

As volatility returns to the markets, one of the best ways to profit from volatility is with the VXX ETN, which provides exposure to the S&P 500 VIX Short-Term Futures Index Total Return.

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