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Keep an eye on the Volatility Index (VIX), we said in early February.
In fact, on February 4, we highlighted opportunity in the:
ProShares Ultra VIX Short-Term Futures ETF (SYM: UVXY) -- The ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index. When the VIX pops, the UVXY typically follows.
Since February 4, the UVXY ran from a low of about $19 to a recent high of $26.55.
iPath S&P 500 VIX Short-Term Futures (SYM: VXX) -- The VXX ETN provides exposure to the S&P 500 VIX Short-Term Futures Index.
Since February 4, the VXX ran from about $44 to a recent high of $55.31.
ProShares VIX Short-Term Futures ETF (SYM: VIXY) -- ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration.
Since February 4, the VIXY ETF ran from about $44 to a recent high of $53.50.
And while volatility is sky-high at the moment, it could get worse. Not only is the world dealing with a massive trade war between the U.S., Canada, China, and Europe, but there are now concerns it could push us all into a global recession.
Most recently, President Trump said that if a 50% tax on American whiskey goes into effect, the U.S. will hit back with a 200% tariff on European wine, Champagne, and spirits by April 1.
In fact, as noted by the President:
“If this Tariff is not removed immediately, the U.S. will shortly place a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES,” Trump wrote. “This will be great for the Wine and Champagne businesses in the U.S.”
In short, buckle up for more volatility.
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Written by Ian Cooper
