Along with the VIX tumbling to 2007 lows on Wednesday, volatility ETFs followed suit as well, reported ETF Trends.
This included the?iPath S&P 500 VIX Short Term Futures ETN?(VXX) and the?VelocityShares Daily 2x VIX Short-Term ETN?(TVIX).
By Wednesday morning, TVIX was down?3% and for the year-to-date, it’s down 28.91%; this follows last week’s VIX plunge of 39%.?
Keep in mind this fall also came after the VIX rose greater than 40% prior to 2012’s end–more than the stock market’s volatility wrote, wrote Michael Santoli for Yahoo!.
Since 2008, the volatility-based products have become very popular after the financial crisis, evolving into a new asset class Santoli refers to as “the downside.”
In addition to the VXX and TVIX, other volatility ETF products include VelocityShares VIX Short-Term ETN (NYSEArca: VIIX), ProShares Ultra VIX Short-Term Futures (NYSEArca: UVXY) and ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY).
The products, which dramatically fell in 2012 and all continue to do so in this short new year, are designed to track VIX futures contracts rather than the spot price.
While they have faced tough times, this comes as the CBOE futures exchange reported a record-breaking year in 2012, including its VIX futures volume?setting a new annual record with 23.79 million contracts traded.
These new highs took place while more than 95% of call options on VIX futures traded in 2012 expired worthless noted Santoli.?
On Thursday, the VIX closed at 13.49, down 2.32%.?