These 3 volatility trades more than doubled in days

<p>Schools are closed. Sports teams play in empty arenas. Cities cancel events and companies close as markets plunge to historic downturns. Fear is so out of hand, the CBOE Volatility Index (CBOE: VIX) exploded to 83 before settling around 75.

All this because of the coronavirus history, because the World Health Organization (WHO) declares that we have a pandemic. There are now 4,226 cases in the United States and at least 75 people died per Centers for Disease Control on March 17.

“I can say that we will see more cases and things will be worse than they are right now,” says Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, March 12.

Unless you are on the short side of the market, some of the safest bets during the current pandemic have been volatile, as I have noted before.

As I told you on February 27, these are actually the three largest volatility stocks to own.

Top Volatility Trading: ProShares Ultra VIX Short-Term Futures ETF (UVXY)

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My first choice is Pro Shares Ultra VIX Short-Term Futures ETF (NYSEARCA: UVXY). This ETF was designed to match twice (2x) the daily development of the S&P 500 VIX Short-Term Futures Index.

In the original article, I said “If things get worse with viruses, I think we can see $ 22 in the short term.” And I noticed that the dissertation would be even stronger if the coronavirus made its presence known in the United States.

That was on February 27, when UVXY traded at $ 20. As of March 17, UVXY is now up to a full $ 91.30.

Is this the gas trade? I do not think it is yet. Should markets fall further, possibly testing 2016 positions, I think UVXY could go to $ 110 per share in the short term.

Top Volatility Trade: Velocity Shares Daily 2x VIX Short-Term ETN (TVIX)

My next choice is actually an exchange-traded banknote (ETN). Velocity Shares Daily 2x VIX Short-Term ETN (NASDAQ: TVIX) tracks futures contracts on the S&P 500 VIX Short-Term Futures Index. This is the same index as UVXY above.


“If virus headlines got worse, I think it could increase to $ 80,” I noted in my original article on February 27. At the time, TVIX was trading at just $ 86.50. It is now up to $ 610 per share and is waving higher.

So what does the future hold? No one knows for sure, but with so much fear in the market, I would not be shocked to see TVIX close to $ 800 next week.

Top Volatility Trading: iPath S&P 500 VIX Short-Term Futures (VXX)

The IPath S&P 500 VIX Short-Term Futures ETN (AMEX: VXX) is the latest choice in this trio. This gives exposure to the S&P 500 VIX Short-Term Futures Index Total Return.

Source: Shutterstock

“Prices could rise to $ 20 in the short term as market craters.” I noticed. That was back when the VXX was trading at $ 21. It is now up to $ 60.77.

With the VXX ETF, I think we could actually see a test of $ 80 per share soon, as fear of coronavirus gets worse. Not bad in any market, and especially good for a time of such uncertainty.

While everyone has exploded higher, I think we could see even higher peaks, as the virus history continues to spread. Until it ends, volatility will increase.

Ian Cooper, an contributor, has been analyzing stocks and options for web-based advisory services since 1999. At the time of writing, Ian Cooper had no position in any of the above securities.