Volatility-linked ETFs followed the CBOE Volatility Index lower Friday and U.S. stocks rallied after Federal Reserve Chairman Ben Bernanke’s speech at Jackson Hole fed speculation the Fed will announce more stimulus at its September policy meeting.

The VIX moved lower Friday after advancing the previous four sessions.

The iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) and VelocityShares Daily 2X VIX Short Term ETN (NYSEArca: TVIX) were down 3.4% and 5.1%, respectively. The products are designed to replicate the performance of a VIX futures contracts. [Why Volatility ETFs Aren’t Matching the VIX]

Fed chief Bernanke “left little doubt that he is looking toward doing more to give the economy a lift at the Fed’s next policy meeting in September,” reports Jon Hilsenrath at The Wall Street Journal. [Gold, Miner ETFs Jump After Bernanke Speech]

However, stock traders were hedging on Thursday before the Bernanke speech. The note below is from Paul Weisbruch, head of ETF/options sales and trading at Street One Financial, that was sent Friday:

“Yesterday amid the broad market sell-off, VXX (iPath S&P 500 VIX Short Term Futures ETN) options were active, with mainly call buyers. Registering a multi-week high yesterday, and with the VIX itself rising more than 4% yesterday and now trading with a $17 handle, these VXX call buyers seem to be positioning for additional volatility to enter the marketplace.

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