Traders Brace for End of Quiet After VIX?s Biggest Drop: Options
By Callie Bost
(Bloomberg) — Traders in one of the most popular exchange-traded notes tracking volatility are convinced the calm in U.S. stocks won?t last.
Investors added $514 million in February to the iPath S&P 500 VIX Short-Term Futures ETN, known by its ticker symbol VXX, for its biggest monthly inflows since July 2013. The note appreciates as futures on the Chicago Board Options Exchange Volatility Index climb.
The VIX, a gauge of market turbulence tied to options on the Standard & Poor?s 500 Index, posted its biggest drop ever last month as a Greek bailout deal, stabilization in the price of oil and dovish language from the Federal Reserve carried equities to fresh records. While the market continues to rally as obstacles dissipate, traders are taking the opportunity to reload on bets for higher stress through VXX.
?The market has short-term complacency,? Dominic Salvino, a specialist on the CBOE floor for Group One Trading LP, a market maker for VIX options, said by phone. ?Right now, there?s near-term quiet, but they?re thinking we could get a return to a volatile environment in at least April or May.?
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