Volatility by China/Europe Fears (NYSE:VXX),(NYSE:VXZ)

It may be time to sink some money into market volatility by purchasing iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX) or iPath S&P 500 VIX Mid-Term Futures ETN (NYSE:VXZ).  The increasing fears in Europe and China have the making for a pretty rough 2011.  

Even Jim Jubak is thinking volatility in 2011.  He says, “It now appears that 2011 is going to be a lot less linear and a lot more volatile, while not necessarily any more or less profitable, than I thought it would be just a few scant weeks ago.”  Then, in discussing the current growth slump, he says, “The real growth slump would set in during the first half of 2011 as the effects of 2008 monetary stimulus in China and 2009 stimulus in the U.S. faded. That slump would be worsened by efforts by the European Union to rein in government spending and in China to fight inflation by tightening the money supply. The U.S. would be almost alone in the world in continuing a program of monetary stimulus -- one designed to lower unemployment rather than reduce the national deficit.”

VXX and VXZ therefore remain options to capitalize on the market volatility.  Over the past 12 months VXX shares have traded between a 52-week low of $44.00 and its 52-week high of $173.00.  VXX shares are currently trading near the low at $44.96, down $0.37 on the day.

VXZ shares are also trading down today at $70.61, down $-0.22.  The VXZ have traded between a 52-week low of $65.15 and its 52-week high of $398.99 in the last 12 months, so it is likewise trading near the low.