Volatility-linked ETFs have been, well, volatile the past two days on extremely heavy trading volume. Traders who haven’t closed the books on 2012 or left for holiday vacation have been whipsawed by a jittery market driven by the latest headline on fiscal cliff negotiations.

Volatility-linked exchange traded products such as iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX), VelocityShares VIX Short-Term ETN (NYSEArca: VIIX), VelocityShares Daily 2x VIX Short-Term ETN (NYSEArca: TVIX), ProShares Ultra VIX Short-Term Futures (NYSEArca: UVXY) and ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY) opened higher Friday.

The funds, which are designed to track futures contracts based on the CBOE Volatility Index, had a wild day Thursday along with the U.S. stock market as fiscal cliff talks appear to be going down to the wire. Congressional leaders and the Obama administration need to hammer out a deal by year-end or automatic spending cuts and higher taxes will be triggered. Investors are worried the economy could slip back into recession in 2013.

The VIX rose above 20 on Thursday for the first time since July. [Volatility ETFs Rally as VIX Jumps 30% in Six Days]

“The VIX is telling us the time of reckoning is upon us,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research, in a WSJ.com report. “We’ve had incredibly low volatility during the second half of the year, but now we could be entering into a time of higher volatility.”

The volatility products are seeing trading volume skyrocket this week. For example, TVIX saw its highest volume ever on Thursday in terms of shares traded. Over 5 million TVIX shares traded on Thursday.

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