Avc TV
  • Contact
  • Tools
    • Compress JPEG to 100 KB
    • Compress Images to 50 KB
    • Compress JPEG to 200 KB
  • News
  • Movie
  • Education
  • Tech
  • Lifestyle
No Result
View All Result
Avc TV
  • Contact
  • Tools
    • Compress JPEG to 100 KB
    • Compress Images to 50 KB
    • Compress JPEG to 200 KB
  • News
  • Movie
  • Education
  • Tech
  • Lifestyle
No Result
View All Result
Avc TV
No Result
View All Result
Home Tips

What Is VXX and How Does It Work?

mindmingles by mindmingles
January 26, 2022
in Tips
0
332
SHARES
2.6k
VIEWS
Share on FacebookShare on Twitter

VXX, a leveraged exchange-traded note (ETN) issued by Barclays Bank PLC. It is designed to track the performance of the VIX, a popular measure of market volatility. It is also known as the VIX short-term futures ETN. It does this by using futures contracts on the S&P 500 Index and rolling them over every month. The fund is structured as an ETN rather than an ETF because it doesn’t hold any assets in custody. 

According to tastytrade, “The VXX is an Exchange Traded Note (ETN) that tracks the VIX short-term futures. To be more specific, the VXX is a portfolio composed of the front two-month/VX futures that bear continuously changing weights. VXX is just one of the available volatility products, and it is important to note that it does not always perform like the other products may (such as the VIX).”

The leveraged ETN was launched in 2009 after the financial crisis when investors began to demand more ways to trade on volatility. The VIX is calculated from S&P 500 options and tends to rise when investors are worried about downside risk in stocks. In general, a higher reading for the VIX suggests that investors are more fearful and would use options to hedge their portfolios or take short positions in stocks.

Table of Contents

    • You Might Also Like
    • Twinkling Petals: How Holiday Florals Turn Houses Into Winter Wonderlands
    • From Celebration to Farewell: How Thoughtfully Chosen Flowers Speak When Words Fall Short
  • How Does It Work?

You Might Also Like

Twinkling Petals: How Holiday Florals Turn Houses Into Winter Wonderlands

Twinkling Petals: How Holiday Florals Turn Houses Into Winter Wonderlands

June 16, 2025
From Celebration to Farewell: How Thoughtfully Chosen Flowers Speak When Words Fall Short

From Celebration to Farewell: How Thoughtfully Chosen Flowers Speak When Words Fall Short

June 16, 2025

The goal of volatility trading is that there will be times when the VIX rises sharply, but stocks remain flat. If you buy a futures contract on the VIX, you are essentially paying for insurance against a sudden fall in stocks. If stocks don’t fall, you can sell the futures contract at a profit.

Many traders use the VIX to hedge their portfolios or trade on volatility directly. They might buy or sell futures contracts on the VIX when they think that it will go up or down.

The problem with buying and selling futures contracts is that you need to put up a margin equal to about 15% of the value of the position. Since future contracts have a daily settlement, you have to do this every day and pay interest on your margin balance. The VIX short-term futures ETN ETN removes these transaction costs because it rolls over its future contracts once per month. Also, it doesn’t have any margin requirements.

How Does It Work?

The leveraged ETN is designed to track the performance of a hypothetical index composed of the first two months of the future contracts on the VIX. The more that investors are worried about volatility, the higher the price of the leveraged ETN will be. A weighted average of its components determines the price:

= [(X1)(X1 Price) + (X2)(X2 Price)]/

Where X1 and X2 are weights given to each month’s future contract.

These weights are determined by how many days are left until the expiration of each contract. The weight for each contract will change every day as expiration draws closer.

When you buy or sell one unit of VXX, you’re purchasing or selling two units of the first month’s futures contract and one unit of the second month’s futures contract. The latter is because there are always two months left until expiration for these contracts, so they weigh 0.5.

The leveraged ETN is structured as a senior unsecured note issued by Barclays Bank PLC. Usually, it is backed by the collateral held in a segregated account at the firm.

The instrument has an annual management fee of 0.75% and a market-to-market daily settlement fee of 0.05%. It was created in 2009 to track the CBOE’s VIX Futures Index, which tracks the price of VIX futures contracts with two months remaining until expiration.

The first-month contract expires monthly, while the second one expires quarterly. There are always two months left until expiration for these contracts.

Previous Post

Unleash imagination with best-in-class gaming machines

Next Post

The Rolex GMT “Pepsi” Master ii (A complete Review)

mindmingles

mindmingles

Related News

Twinkling Petals: How Holiday Florals Turn Houses Into Winter Wonderlands
Tips

Twinkling Petals: How Holiday Florals Turn Houses Into Winter Wonderlands

June 16, 2025
From Celebration to Farewell: How Thoughtfully Chosen Flowers Speak When Words Fall Short
Tips

From Celebration to Farewell: How Thoughtfully Chosen Flowers Speak When Words Fall Short

June 16, 2025
Safeguarding Smiles and Structures: The Power of Routine Care and Rigorous Standards
Tips

Safeguarding Smiles and Structures: The Power of Routine Care and Rigorous Standards

June 16, 2025
How to Pick the Best Replacement Sofa Cushions
Tips

How to Pick the Best Replacement Sofa Cushions

March 15, 2025
Next Post
Rolex

The Rolex GMT "Pepsi" Master ii (A complete Review)

Overwatch Esports

Overwatch Esports: Details On Its Audience, Value Regarding Other Esports Community

Trending News

Is Tokyo Ghoul on Netflix? [How to Watch Online]

Is Tokyo Ghoul on Netflix? [How to Watch Online]

August 31, 2022
health benefits of kombucha

8 Impressive Health Benefits Of Kombucha|Interesting Facts to Discover

November 1, 2023
The 10 Best Things About Quietest Keyboards

The 10 Best Things About Quietest Keyboards

December 1, 2022
Bergamot: A Unique and Versatile Citrus Fruit

Bergamot: A Unique and Versatile Citrus Fruit

January 12, 2023
tamilrockers 2021, tamilrockers 2021 tamil movies download, tamilrockers movie download 2021, tamilrockers com 2021, 2021 tamil movies download in tamilrockers, tamilrockers 2021 new movie download, tamilrockers 2021 download, tamilrockers 2021 full movie, tamilrockers 2021 movie download, tamilrockers 2021 movies, tamilrockers kuttymovies 2021, jio rockers telugu movies 2021 download tamilrockers, tamilrockers. com 2021, tamilrockers+2021, tamilrockers isaimini 2021 tamil movie download, tamilrockers 2021 tamil movies download isaimini hd, tamilrockers movie 2021, tamilrockers malayalam 2021, master full movie in tamil download tamilrockers hd 2021, tamilrockers kannada 2021

Tamilrockers 2021 – Celebrating a Decade of Tamil HD Movies

September 7, 2021

About

Avc TV


AVC TV is a social platform where people can get the most recent news and updates about the world. You'll never feel bore while browsing the site. Guaranteed entertainment is free for everyone, no subscription no bullshit. Enjoy your time!

Editor's Pick

Pet-Friendly Escapes, Authentic Stays, Thanks to Bluepillow.com
Business

Pet-Friendly Escapes, Authentic Stays, Thanks to Bluepillow.com

by varsha
June 17, 2025
0

For families who travel with pets, the biggest challenge isn’t deciding where to go—it’s finding a place that welcomes everyone....

Read more

Most Hot Topics

Pet-Friendly Escapes, Authentic Stays, Thanks to Bluepillow.com

Twinkling Petals: How Holiday Florals Turn Houses Into Winter Wonderlands

From Celebration to Farewell: How Thoughtfully Chosen Flowers Speak When Words Fall Short

Safeguarding Smiles and Structures: The Power of Routine Care and Rigorous Standards

Shift & Rev Right—Save Your Ride and Wallet

Bloom Brightly: Your Guide to Fast, Fresh Flower Delivery in the Southwest

Understanding Mould: Causes, Types, and Health Risks

Delivering Accuracy and Efficiency at Every Stage

What is Microcement?

  • Privacy Policy
  • Terms and Conditions
  • About Us

Copyright © 2025 All Rights Reserved | Powered by Avctv
Email: contact@may15media.com

No Result
View All Result
  • Contact
  • Tools
    • Compress JPEG to 100 KB
    • Compress Images to 50 KB
    • Compress JPEG to 200 KB
  • News
  • Movie
  • Education
  • Tech
  • Lifestyle

Copyright © 2025 All Rights Reserved | Powered by Avctv
Email: contact@may15media.com