There are ETF's based on the purchase of VIX futures.
Posted on: January 10, 2020 at 01:57:20 CT
scif MU
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They are used as a hedge against a sharp decline in the SPX, because volatility accompanies that, thus a rise in funds tracking the VIX. The problems is that there is a constant decay as contracts expire and new ones much be purchased. So, while a fund like, say, the VXX is useful as a short term holding as a hedge, it has a natural tendency to drop in price over the longer term. The SVXY is the inverse of that, so it has a tendency to rise over time, although subject to sharp sell-offs.
Because so many people had piled into the trade to take advantage of the low volatility of the market a couple of years ago, when a spike in volatility had everyone running for the door, probably partly as a result of machine trading, then it crashed in one day, especially after hours. It bankrupted some similar funds. They've tried to make it safer, however it should not be a large portfolio position. Sadly, I learned that through brutal experience.