Derived from options prices on the S&P500, VIX® – the CBOE Volatility Index® – is an indicator of short-term market outlook, spiking in times of market uncertainty
The index itself cannot be traded but CBOE has introduced futures reflecting the market’s estimate of the VIX® Index on various expiration dates into the future
VIX ETFs track these futures, which actually puts the funds two steps away from market volatility, relying on futures to estimate the index which is itself derived from option pricing
Also, because the futures will decay over time, as they approach maturity, the roll-over of the funds into the next futures contracts represent a cost to the funds invested in them
This is why the VIX ETFs and ETNs are not investment vehicles but indicators of market sentiment over the shortest possible term, which may be used as tactical hedge of a portfolio for a few days. ETFs invested in Mid-Term Futures add another level of uncertainty
As benchmark to track potential trend reversal, a 1.5 inverse ETF, ProShares Short VIX Short-Term Futures
By controlling for performance of the ETFs and ETNs of the selection over short time frames, shifts in market anticipations will be highlighted
Check performance and volatility from 2 weeks to 1 month - on tab at top right of your screen
