Stock prices move – that’s what they do. This movement is what keeps the stock market active. It allows investors to make profits, provides liquidity, and reflects the performance of the companies behind the stocks.
VIX Index
Investors may want the opportunity to trade volatility if they have an opinion on “market activity”. In other cases, they might want to protect their portfolios from volatility and hedge against fluctuations. This is where the VIX index comes into play.
The index was created as an indicator to track stock market volatility, and it is calculated by the Cboe Options Exchange. This index is a key measure of market expectations for short-term volatility as expressed by the prices of options on the S&P 500 stock index. It is the primary gauge of investor sentiment and volatility in the U.S. stock market, and many related products have been launched since the inception of the VIX. These related products use the index as an underlying asset or a benchmark for investors looking to play volatility.
List of Volatility ETFs and Trading Securities
Below is a list of products available to investors who wish to use exchange-traded funds to play market volatility. Market volatility and the VIX index tend to increase when the market declines and vice versa, so see how these funds react to market fluctuations and decide which ones are best for your portfolio.
You will notice that there are more trading securities from the exchange-traded funds, but this ratio may change over time. If you are not familiar with trading securities, they trade similarly to ETFs, although they are technically different products. For the purpose of this list, they achieve a very similar effect in playing market volatility.
Also note that some of these products mention VSTOXX instead of VIX. Investors might consider VSTOXX as the European VIX – tracking volatility in the EURO STOXX 50 instead of the S&P 500.
The volatility ETFs and trading securities are updated regularly. New products are created, and some may be completely closed. This list is current as of May 12, 2022, but no matter when you read this, it’s best to look deeper into any products that interest you to ensure they will help you achieve your investment goals.
SVXY – ProShares Short VIX Short-Term Futures ETF
UVXY – ProShares Ultra VIX Short-Term Futures ETF
VIXM – ProShares VIX Mid-Term Futures ETF
VIXY – ProShares VIX Short-Term Futures ETF
VXX – iPath Series B S&P 500 VIX Short-Term Futures ETN
VXZ – iPath Series B S&P 500 VIX Mid-Term Futures ETN
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Sources:
Cboe. “VIX Index.”
STOXX Digital. “EURO STOXX 50 Volatility (VSTOXX).”
ProShares. “ProShares Short VIX Short-Term Futures ETF.”
ProShares. “ProShares Ultra VIX Short-Term Futures ETF.”
ProShares. “ProShares VIX Mid-Term Futures ETF.”
ProShares. “ProShares VIX Short-Term Futures ETF.”
Barclays. “iPath Series B S&P 500 VIX Short-Term Futures ETN.”
Barclays. “iPath Series B S&P 500 VIX Mid-Term Futures ETN.”
Source: https://www.thebalancemoney.com/volatility-etfs-for-playing-market-activity-1214932
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