Volatility Wins Again

Volatility - Large Pic

The VXX is up 2.5% thanks to stocks falling off the cliff.


Always a risky bet but after the iPath S&P 500 VIX Short Term Futures (VXX) hits 52-week lows it due for a bounce.  Such is the case this week after the VXX got down to $12.70 last Friday.  Today the VXX is at $13.61 and fear enters back into the market.

Could all the ETFs trading on the market be part of the increased volatility?  That's the question theStreet.com digs into today.  Mastery recommends reading their findings.

NEW YORK (TheStreet) -- Since their creation in 1993, ETFs have opened up a new channel of arbitrage for market participants and now account for 25-35 percent of daily trading volume.

ETFs allow investors to track indices or baskets of assets, allowing for more diversification and access to illiquid assets. Engaging in arbitrage, investors can profit from price deviations between the ETF and the Net Asset Value (NAV) of its underlying assets. While giving investors a low-cost investment tool, researchers argue whether ETFs may have brought some adverse effects to the market from arbitrage (continue).