Short-Volatility Fund Cash Levels Hits Record High

Tyler Durden's picture

While VIX futures and options speculators have pulled back (albeit very marginally) from their record short positions in the last week, ETF products betting that volatility will sink lower have never been more popular.

As VIX collapsed to an 8 handle and record low close last week, futures and options specs did pull back very modestly...

But, as Bloomberg reports, investors have continued to give the short-volatility trade their vote of confidence this year.

With $2.4 billion in assets, short volatility exchange-traded funds are backed by the most cash on record, according to data compiled by Bloomberg.

For now, the volatility bears have the momentum.

Inverse VIX funds have nearly tripled in size this year alone.

The amount of assets tracking short-volatility products rose above that of their long-volatility counterparts for the first time in two years in the third quarter.

In fact, as Bloomberg points out, regardless of direction, volatility itself is an in-demand asset class. The popularity of volatility products far outweighs that of other prominent corners in the U.S.-listed ETF market.

With $4.6 billion in assets, they are larger than funds tracking any single European country, other than Germany.


Finally, Bloomberg data shows the average holding period for the inverse VIX ETF XIV is 5 hours...

So the most levered bullish bet ever with the highest frequency of trading ever... let's just hope that Jay Powell knows where the 'Save The World' button is.

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Sy Kloine Bee's picture

They're all short VIX, but they'll be left holding their DIX

SoilMyselfRotten's picture

This is the bet, if you want to side with Central banking and believe they know what the hell they're doing

jamesmmu's picture

Is that mean a VIX pop could well trigger a stock market crash?

Clowns on Acid's picture

The VIX is in... fuggetaboutit....