Don't Hate the VIX ETPs, Hate the Tourists

The VIX complex, and to a lesser extent the S&P 500 options, were completely thrown off by the move in the VIX futures on Monday caused by buying algorithms triggered around the VIX ETPs, VelocityShares Daily Inverse VIX ST ETN (XIV) and ProShares Short VIX Short-Term Futures (SVXY) .

We have seen algorithms feed on themselves in the past and will likely see algos feed on them again. But how does one trade this space after it's been put through a meat grinder like the VIX and the VIX ETPs were? The answer is to analyze what happened, think about how the space has changed, and develop a plan. We took care of step one yesterday, so what about steps 2 and 3?...1006 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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