Exchange traded funds (ETFs) and products designed to profit from rising market volatility have fallen back close to their February low after a brief spike.

The iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX) is by far the largest in the group with a market cap of about $1.4 billion. [Fueled By Pessimistic News, Volatility ETFs and ETNs Surge.]

The exchange-traded note is geared to track the performance of futures contracts tied to the CBOE Volatility Index, known as the VIX. The benchmark is based on S&P 500 options contracts and rises when investors are seeking protection in the derivatives markets.

After surging above $39 a share in mid-March, iPath S&P 500 VIX Short-Term Futures ETN was trading a little above $29 Friday afternoon. The VIX itself is prone to quick swings after long periods of relative calm.

However, volatility products track VIX futures rather than the spot price.

“Sophisticated investors with long-term outlooks could use this fund to partially hedge their portfolios against future downturns but must first understand the unusual mechanics of this exotic vehicle,” writes Morningstar analyst Abraham Bailin in a profile of S&P 500 VIX Short-Term Futures ETN.

The note was down 21.9% in the first quarter, according to Morningstar. The ETN traded lower Friday as an ETF tracking the Dow Jones Industrial Average rallied to a 52-week high. [Dow ETF At Recovery High As Emerging Markets Jump.]

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.