Trading Volatility ETFs

Adam Warner

Previously, to trade volatility, you needed to simply buy and sell standard calls and puts. In fact, a good number of people traded volatility without realizing it. But around the popping of the tech bubble, the world discovered the Chicago Board Options Exchange Volatity Index (VIX). And they assigned it nickname, the Fear Index. A few years later, the Chicago Board Optons Exchange (CBOE) devised ways to trade the VIX. First, we got VIX futures, followed soon by VIX options.

Unfortunately, not everyone can trade futures, or even watch them on their regular trading screens. So along came Exchange Traded Notes (ETNs) based on volatility. The first, and most popular to this day, is IPath S&P 500 VIX Short-Term ...