Other volatility ETFs include 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).
The products, which fell sharply in 2012, are designed to track VIX futures contracts rather than the spot price. The VIX is known as Wall Street’s fear gauge and rises when investors are seeking protection in S&P 500 options. Specifically, the VIX reflects volatility expectations for the next month.
“In a major behavioral shift in the wake of the 2008 financial crisis, volatility-based products have become wildly popular in trading circles, despite their complexity and sometime misapplication,” writes Michael Santoli at Yahoo Finance.
More than 95% of the call options on VIX futures traded in 2012 expired as worthless, according to the story.