IF YOU FEAR A CORRECTION, USE VIX ETN AS A HEDGE $VXX $VIX $SPY #HEDGING
Are you concerned about a stock-market correction in the short-term? If the answer is yes, take a look at iPath S&P 500 VIX ST Futures ETN VXX, which represents the CBOE Volatility Index (VIX). VXX typically goes up when the stock market goes down. Let us start by looking at the annotated chart that shows the correlation between S&P 500 represented by ETF SPY, and VXX.
Please click here to see the annotated chart of VXX.
Here are the key observations from the chart:
- Every time the stock market dips, VXX goes up. Thus VXX provides a good short-term hedge against market decline.
March 24, 2015