Daily ETF Roundup: VXX Jumps On Weak Equities, TVIX Plummets 30% In Odd Day

by on March 22, 2012 | ETFs Mentioned:

Thursday marked the third straight loss for major benchmarks, as it seems more than likely that markets will post a losing week by the time tomorrow comes to an end. Lackluster data as well as some necessary profit taking have been the main culprits of market troubles, as many investors are eager to realize their gains sooner rather than later. The Dow surrendered 78 points during the session, while the S&P 500 lost grip on the key 1,400 benchmark, sinking 0.7%. A similar day tomorrow will put the Dow back below 13,000, which may spark a sell-off as investors and traders will fear that the recovery that 2012 has boasted is finally screeching to a halt [see also Money Market ETFs In Focus: MINT vs. GSY].

Looking to commodities, crude oil suffered another crushing blow as it continues its volatile streak. Ever since the asset topped the triple digit barrier, it has been stuck in a rut, unable to find a sure direction despite high gas prices around the globe. Gold lost a meager 5 points during the session. Sugar futures made steady gains while others, like natural gas, coffee, and palladium, took the brunt of the blow for the day. Below, we outline two of the most notable ETF performances on the day to help keep investors in the know in today’s markets [see also Natural Gas and Company In Steep Contango].

One of the biggest winners on the day was the S&P 500 VIX Short-Term Futures ETN (VXX), which jumped 1.2%, a relatively small gain for this volatility fund. VXX tracks front month VIX futures, and as such, has had a rough couple of days, as it has been among the worst performing ETFs this week. Despite today’s gains, the fund is still down nearly 50% on the year, though it is making a name for itself as a prime trading instrument. The fund exchanged hands over 61 million times today and is averaging roughly 40 million over the trailing four weeks [see also Five ETFs With Sky High Yields].

One of the biggest losers may come as a huge surprise to most investors, the Daily 2x VIX Short-Term ETN (TVIX) lost nearly 30% on the day. This result is rather perplexing given that TVIX is essentially just a leveraged version on VXX, meaning that one would expect it to have jumped around 2.4% on the day. While it is too early to definitively comment on this strange behavior there are two factors that should be noted. First and foremost, TVIX has been trading at a massive premium, as its NAV sits around 7.62, but the fund is trading over $10 (a premium of over 30%). Also, the fund more than doubled its ADV on the day, suggesting that investors have discovered the premium and are taking advantage of it. It is also possible that Credit Suisse began creations today to help alleviate the premium, investors should keep their ear to the ground to monitor this strange behavior.

 Disclosure: No positions at time of writing.