VIX ETF Surges Off Record Low Crushing Contango Cruisers

Following our discussion of perhaps the most successful (and/or most risky) trades of the last decade – that of shorting the front-month VIX – we were less than surprised that (VXX)-the (VIX) ETF has collapsed to new record-lows this morning. A snap higher in VIX has been met by an avalanche of vol selling and, as we discuss below, the accelerating contango as expirations loom has encouraged yet more to take on unlimited risk positions to pick up pennies in front of the steamroller. All the time “The Fed has your back,” it appears traders believe the steamroller driver has his foot on the brake… As if on cue – VIX has spiked and VXX surged.

Record lows for VXX – The VIX ETF..