-$0.78 (-3.37%)
05:37AM (15 mins delay)
Nov 16, 2009 - 10:41 PM EST
What should investors make of the exceptionally steep yield curve coupled with the level of stock market volatility, as measured by the VIX index? Back in June, I wrote an article on Seeking Alpha calling for investors to short volatility. Since then the VXX (volatility ETN) has fallen from 75 to 42.5 or by approximately 43%, as the VIX index fell from the 50% range to the low 20% range. Where do I think the VIX is going from here? Applying the same analysis as what I posted back in June would lead to the same conclusions – short volatility represents a compelling opportunity. However, I don’t believe shorting volatility represents quite the same risk/reward as it did before. (Click chart to enlarge.)
Source: Seeking Alpha (Nov 16, 2009 - 10:41 PM EST)
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