How To Buy Vix
The Chicago Board Options Exchange Volatility Index (VIX index) attracts traders and investors because it often spikes way up when US equity markets plunge. Known as the fear gauge, the VIX index reflects the market's short-term outlook for stock price volatility as derived from options prices on the S&P 500.
how to buy vix
In the real world, traders stay in VIX ETFs for 1 day, not 1 year. VIX ETFs are emphatically short-term tactical tools used by traders. Products like VXX, an exchange-traded note (ETN), are incredibly liquid, often trading more than their total assets under management, or AUM, in 1 or 2 days of trading. Traders speculate with VIX ETFs because they offer the best (or least-worst) means to get at the VIX index in the very short run. So-called "short-term" VIX ETFs offer better 1-day sensitivity to the VIX index then do "midterm" VIX ETFs.
VIX ETFs aren't ETFs in the strictest sense. They come in ETN or commodity pool structures, not as traditional mutual funds. ETNs carry the counterparty risk (usually low) of the issuing banks, while commodity pools issue K-1's at tax time.
VIX ETFs come in other flavors than the pure-play described above. VIX overlay ETFs hold broad equity positions and an overlay of VIX futures exposure. They aim to limit downside equity risk but either bear or try to minimize the high cost of long-term VIX futures exposure.
Market Mover Update: It was just the first day of the week, but on Monday small cap stocks lagged the rest of the market, with the Russell 2000 (RUT) gaining less than half as much as the SPX.
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The VIX index draws from both call and put options with more than 23 days and less than 37 days to expiration.\u00a0"}},"@type":"Question","name":"How do I bet against the VIX?","acceptedAnswer":"@type":"Answer","text":"The best way to directly bet against the VIX is to use bearish options trading strategies on the VIX itself, such as the bear call spread and bull put spread.\u00a0Additionally, investors can purchase SVXY, ProShares Short VIX Short-Term Futures ETF. Because of contango, this ETF tends to shed value faster than the VIX.\u00a0"]}Next LessonVIX Term Structure ExplainedJanuary 27, 2022CBOE Volatility Index GuideFebruary 3, 2022High Dividend, Low Volatility ETFsJune 14, 2021Additional ResourcesCBOE Volatility Index: Live Data
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In March 2020, as concerns around the COVID-19 pandemic took hold and its impact on the economy was unknown, the VIX reached an all-time high of 82.69. This peak surpassed its previous high of 80.86, which was reached during the fall of 2008 as the global financial crisis was wreaking havoc on markets. For most of its existence, the VIX has generally sat somewhere between the levels of 10 and 30.
But for those who are more inclined to trade and speculate, ETFs that track the VIX can be a useful tool. When uncertainty and fear hits the market, stocks generally fall, and your portfolio could take a hit. But having a small amount of money invested in an ETF that tracks the VIX can help dampen the blow. 041b061a72