Monday, November 8, 2010

More VIX ETN's Coming: Can they Get Here by Thursday? (VXX)

The volatility index has been spanking the longs (click to enlarge):

And I for one think "Hey I can learn from their pain and get long myself!".
That reversal of the short-term uptrend last weeks looks like a move to totally dishearten folks who were betting on more vol.
My best guess is sooner rather than later. Let's say...Thursday.
Anywho, Here's the headline story from ETF database:

ETF Pipeline Grows: More Hedge Fund Products, VIX ETNs In The Works

...More VIX ETNs Ahead

Also this week, Citigroup filed details on a proposed exchange-traded note that would offer investors another options for exposure to VIX futures. The C-Tracks Exchange-Traded Notes Based on the Performance of the Citi Volatility Index Total Return (CVOL) would be the first foray into the ETF industry for the financial behemoth, and would enter into a space that has become increasingly competitive in recent months. The underlying index, a new benchmark, is designed to measure directional exposure to the implied volatility of large cap U.S. stocks [see Using ETFs As "Portfolio Insurance"].

Currently, there are three products in the Volatility ETFdb Category, all of which are ETNs from iPath. Existing products include the S&P 500 VIX Short-Term Futures ETN (VXX), a mid-term VIX futures ETN (VXZ) and an inverse S&P 500 VIX Short-Term Futures ETN (XXV). Barclays also offers the ETN+ S&P VEQTOR (VQT), which allocates exposure between equities, volatility futures, and cash, depending on observed levels of volatility in the market. Jefferies has a volatility-linked ETF in the works; that product would be the first to offer investors interest in an underlying basket of volatility-related securities (existing products are all structured as exchange-traded notes, meaning that they are debt instruments linked to the performance of an underlying benchmark).

The proposed Citi ETN would be structured as a ten-year note, and would rank equally with all other unsecured and unsubordinated debt of Citigroup [also make sure to check out our Mutual Fund To ETF Converter].