Volatility-linked products are designed to track VIX futures rather than the spot price. Therefore, their losses are compounded when VIX futures are in a state of “contango” when longer-dated contracts are more expensive than the front-month contract. [VIX ETFs: An Imperfect Hedge]
VelocityShares Daily Inverse VIX Short-Term ETN
For more information on the CBOE Volatility Index, visit our VIX category.
Max Chen contributed to this article.