Exchange traded funds linked to the CBOE Volatility Index, or “VIX,” jumped Monday and Tuesday as the recent turn in the Eurozone financial saga soured markets.

The ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY) increased 5.1% at last check Tuesday.

On Monday, the volatility index spiked to an eight month high on the worsening Eurozone debt crisis, with the VIX surging as high as 17%.

The VIX is considered Wall Street’s “investor fear gauge” as it is a widely used measure of market risk.

“Investors are coming to the realization that things are slowing down here, and it’s not getting better abroad,” Terry L. Morris, a manager at National Penn Investors Trust Co., said in a Bloomberg article. “Complacency has gotten pretty high. The combination of Greece and Spain, and the China slowdown put investors in a more bearish mode.”

The VIX was 6.6% higher Tuesday.

The popularly traded VelocityShares Daily 2x VIX Short-Term ETN (NYSEArca: TVIX) was up 8.1% during trading. The exchange traded note was trading at a 90% premium after issuer Credit Suisse halted creation of new shares. TVIX currently trades at a 5.9% premium to its net asset value. [Volatility ETFs: Checking in on the TVIX Premium]

Volatility-linked exchange traded products are complex investment vehicles designed to track VIX futures, not the spot price. As such, these instruments are intended to be used as a daily hedge, and their performances will begin to diverge from the underlying index if held for longer than one day.

ProShares VIX Short-Term Futures ETF

For more information on the market volatility, visit our volatility category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, 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.

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