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

Market May End The Year Where It Is Today, But You Can Still Make Money

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


A number of market participants have begun making year end predictions about where they believe stocks will finish. The predictions have the market finishing higher, lower, a lot higher, a lot lower, and right where it is today. Basically, no one really knows how the stock market will finish 2017 because no one can accurately predict the future.

But, when we look at the past, predictions have been made which aren’t as optimistic. Based on historical data a Goldman Sachs analyst has noted that when stock valuations have been where they are today, the market returns have been in single digits or negative.

Year-to-date the S&P 500 is already up 10.5%, which again compared to historical averages is an above average return. Furthermore, history tells us that we have market pull backs of 5%, 10%, and 15% rather often; about every 3 months, 8 months, and 14 months. We have not seen a 10% or 15% pullback in 2017. Continue reading "Market May End The Year Where It Is Today, But You Can Still Make Money" →

ETF's That Let You Trade the Volatility Index "VIX"

Posted on by Matt Thalman

Matt Thalman - INO.com Contributor - ETFs


One of the many great side effects to the rise in popularity of Exchange Traded Funds, ETF's, is that they have increased the types of investments individuals can buy into. The average investor can now easy buy and sell funds that hold actual commodities, indexes, bond portfolios, and even dabble in the options markets without ever making a signal put or call trade themselves.

Today, I would like to point out how investors can use ETF's to play the S&P 500 Volatility Index or VIX.

But, before we get into the ETF's that allow you to profit from the VIX's moves, let take a look at the VIX itself and what causes it to move in one direction or the other. The VIX is calculated using option pricing. It looks at the price of the call and put options because we know that higher option prices mean that investors believe there is a greater chance of volatility. Without getting into too much detail about options, the reason this works is because if an underlying security has high volatility it can make an option more or less valuable depending on what side of the trade you are on. Because the level of volatility will change the likelihood, the option will expire in or out of the money.

Are you confused yet? Continue reading "ETF's That Let You Trade the Volatility Index "VIX"" →