VIX ETFs Falter as Syria Crisis Abates

ETF Trends

Exchange traded funds that track the CBOE Volatility Index, or “VIX,” are moving lower, with options traders growing more complacent on the Syrian crisis after Russia spearheads a peaceful resolution.

The iPath S&P 500 VIX Short-Term Futures ETN (VXX) was down 2.8% Tuesday.

Earlier this week, U.S. Secretary of State John Kerry raised a hypothetical argument that illustrated an unlikely event where Syria would immediately relinquish all of its chemical weapons.

In response, Russia, along with Syria, jumped on the idea and issued a statement for peaceful talks over handing over Syrian chemical stockpiles.

“We fully support Russia’s initiative concerning chemical weapons in Syria, and we are ready to cooperate,” Syrian Foreign Minister Walid Muallem said, reports USA Today. “We will open our storage sites, and cease production. We are ready to open these facilities to Russia, other countries and the United Nations”

The VIX, or “fear gauge,” declined 5.2% Tuesday and is trading at 14.8. The index has historically traded in a range between 15 and 20.

The VIX initially spiked following speculation over a military response to Syria’s alleged chemical weapons use.[VIX ETF Going for First Three-Day Up Streak Since May]

September has historically been the worst month for stocks. Some options traders are looking at the equity put-call ratio, which was at 0.5 last Friday, a low seen only four times since early 2011, writes Andrew Kassen for ETF Daily News. The high ratio suggests that the “rubber-band of enthusiasm for long equity calls is poised to snap back, with deeper stock market correction to follow,” Kassen said.

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For more information on the CBOE Volatility Index, visit our VIX category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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