VIX Options and ETNs in 2013

2013 was a tough year for long oriented VIX related exchange traded products.  The unleveraged were off about 66% and the leveraged long ETPs were down over 90%.  Persistent low volatility and any lack of sustained backwardation.  The iPath S&P 500 VIX Mid-Term Futures ETN (VXZ) held up better than the others dropping about 44% for 2013.

Needless to say, the bright spot for the space was the funds that focus on a short strategy.  The Velocity Shares Daily Inverse VIX Short Term ETN (XIV) and ProShares Short VIX Short Term Futures ETF (SVXY) put up triple digit returns in 2013.  What was a drag for the long ETPs was a positive for the short ones.

Finally, the low volatility funds were a mixed bag.  Emerging markets underperformed the developed markets and this held true for the iShares MSCO Emerging Market Minimum Volatility Index fund (EEMV) which was down slightly in 2013 while the two low volatility funds that focus on the domestic markets ,USMV and SPLV moved higher, slightly lagging the S&P 500.

ETN Performance

VIX option trading volume put up another record year with average daily volume of 567,000 contracts a day.  This is a 29% increase from 2012.  The average daily volume by month appears in the chart below.

VIX Option Volume