VelocityShares Daily Inverse VIX Short Term (NASDAQ:XIV)

CAPS Rating: 2 out of 5


Player Avatar jimhsu77479 (92.48) Submitted: 9/27/2011 7:56:22 PM : Outperform Start Price: $6.27 XIV Score: +5.38

30+ VIX is unsustainable in the long term due to volatility mean reversion. Look for 20's (upper or lower 20's, depending on the macroeconomic situation). This is penalized by current VIX backwardation, however that too is unsustainable as long as VIX gradually falls below 30. Contango obviously helps this. Not a short term pick because with continuing geopolitical issues and rangebound S&P, further declines are not only possible, but probable. However, the current price is a relatively low one.

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