Volatility ETFs for Playing Market Activity
Stocks have been moving since the creation of the stock market. They move every day. Some move more than others, and this movement is commonly referred to as volatility.
The VIX Index
Of course, investors want the opportunity to trade volatility if they have an opinion about market “activeness." In other cases, they might want to protect their portfolios from the movement and hedge volatility. Enter the VIX Index.
Created in 1993 as an index to track stock market volatility, the index trades on the CBOE (Chicago). It is considered a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices and the world's premier barometer of investor sentiment and market volatility. Related products have launched since the inception of the VIX, using the index as an underlying asset or benchmark.
A volatility ETF might be the preferred investment over the VIX for investors who want to take advantage of and use ETFs over an index or to hedge an index. Here's a list of volatility funds for your research to help with that decision. Market volatility and the VIX tend to increase as the market declines and vice versa, so watch how these funds react to market swings and decide which are the best fit for your portfolio.
List of VIX ETFs and ETNs (Volatility Funds and Notes)
- EXIV - Velocity Shares 1X Daily Inverse VSTOXX Futures ETN
- EVIX - Velocity Shares 1X Long VSTOXX Futures ETN
- IVOP - iPath Inverse S&P 500 VIX Short-Term Futures ETN
- SVXY - ProShares Short VIX Short-Term Futures ETF
- TVIX - Velocity Shares Daily 2x VIX Short Term ETN
- TVIZ - Velocity Shares Daily 2x VIX Mid Term ETN
- UVXY - ProShares Ultra VIX Short-Term Futures ETF
- VIIX - Velocity Shares VIX Short-Term ETN
- VIIZ - Velocity Shares VIX Mid Term ETN
- VIXM - ProShares VIX Mid Term Futures ETF
- VIXX - Jefferies S&P 500 VIX Short-Term Futures ETF
- VIXY - ProShares VIX Short-Term Futures ETF
- VMIN - REX VolMAXX Short VIX Weekly Futures Strategy ETF
- VXX - iPath S&P 500 VIX Short-Term Futures ETN
- VXZ - iPath S&P 500 VIX Mid Term Futures ETN
- VMAX - REX Vol MAXX Long VIX Weekly Futures Strategy ETF
- VMIN - REX Vol MAXX Inverse VIX Weekly Futures Strategy ETF
- XIV - Velocity Shares Daily Inverse VIX Short-Term ETN
- XXV - Barclays ETN+ Inverse S&P 500 VIX Short-Term Futures ETN
- XVZ - S&P 500 Dynamic VIX ETN
- ZIV - Velocity Shares Daily Inverse VIX Mid Term ETN
There are actually more ETNs than ETFs, but we may see this ratio change over the course of time. Likewise, ETFs and ETNs may drop off the list and others may be added. If you have any doubt about a particular ETF or ETN or for the most up-to-date information, check with a professional.