• Free Book
  • Store
    • Books
    • Free First Chapters
    • Free Newsletters
  • Recent Articles

TradingMarkets.com

Quantified Stock Market Trading Strategies & Systems

  • Home
  • New Trading Research
  • Education
    • Articles
      • Connors Research
      • ETFs
      • Options
      • Stocks
      • Volatility
      • Contributors
        • Larry Connors
        • Kevin Haggerty
        • Matt Radtke
    • Trading Lessons
    • Connors Research
    • Glossary
    • Interview Archive
    • Videos
  • Python
  • Quantamentals
    • Quantamentals: The Next Great Forefront of Trading and Investing
    • Quantamentals Resources
  • Courses
  • Store
    • New Book! The Alpha Formula
    • “Buy The Fear, Sell The Greed” – Best Seller!
    • Swing Trading College 2019
    • Trading Books and Guidebooks
    • Street Smarts
    • Online Trading Courses
    • Private Mentoring with Larry Connors
    • Customized Trading Research
    • Amibroker Strategy Add On Modules
You are here: Home / ETFs / Commentary / The Price of VXX is Meaningless

The Price of VXX is Meaningless

October 22, 2012 by Larry Connors

At first blush, this may seem like an odd statement. Of course VXX has a price, and of course when we’re trading we care what that price is and in which direction it moves. As an absolute value, however, we can’t draw any conclusions from the price of VXX. If I tell you that VXX closed today at $25, you cannot deduce anything about the market itself. In contrast, if I tell you that VIX closed today at 25, you immediately know that the market is anticipating 25% annualized implied volatility in the SPX over the next 30 days.

Why is this important? Because it means that you cannot make any trading decisions based on a single VXX price. A VXX price of $10 should not be considered “low”, and therefore a good buy. Likewise, a VXX price of $200 should not be considered “high”. On a related note, you can’t compare the price of VXX to the value of VIX. Today VXX closed just above $9, and VIX closed at $16.32. At the end of this week, VXX will undergo a 1‐for‐4 reverse split, so if nothing else changes, VXX would be around $36, and VIX would still be in the mid‐16s. I repeat: there is no relationship between the price of VXX and the level of VIX. On any given day, they have a great tendency to move in the same direction, but that’s all.

Excerpted from Connors Research Trading Strategy Series: The VXX Trend Following Strategy. If you would like to read more about VXX or Connors Research Trading Strategy Articles please see these related articles:

  • Read Chapter 1 of The VXX Trend Following Strategy: Introduction to Volatility Trading
  • Learn more about VXX
  • Analyze VXX with the TradingMarkets Screener

Filed Under: Commentary, Connors Research, Short Term Trading, Volatility Tagged With: Volatility

About Larry Connors

Larry Connors has over 30 years in the financial markets industry. His opinions have been featured at the Wall Street Journal, Bloomberg, Dow Jones, & many others. For over 15 years, Larry Connors and now Connors Research has provided the highest-quality, data-driven research on trading for individual investors, hedge funds, proprietary trading firms, and bank trading desks around the world.

Larry has been published extensively, with titles like How Markets Really Work, Short Term Trading Strategies That Work, High Probability ETF Trading, and The Connors Research Trading Strategy Series including our latest Guidebook High Probability Trading with Multiple Up & Down Days.

Buy The Fear, Sell The Greed

Buy The Fear, Sell The Greed

Swing Trading College

Company Info

The Connors Group, Inc.
185 Hudson St., Suite 2500
Jersey City, NJ 07311
www.cg3.com

About Us

About
Careers
Contact Us
Link To Us

Company Resources

Help
Privacy Policy
Return Policy
Terms & Conditions

Properties

TradingMarkets
Connors Research

Connect with TradingMarkets

Contact

info@cg3.com
973-494-7311 ext. 628

Free Book

Short Term Trading Strategies That Work

© Copyright 2020 The Connors Group, Inc.

Copyright © 2022 · News Pro Theme on Genesis Framework · WordPress · Log in