Meanwhile, the leveraged ProShares Ultra VIX Short-Term Futures (NYSEArca: UVXY), which tries to reflect two times or 200% the daily performance of the S&P VIX Short-Term Futures Index, is up 20.2% since last Wednesday. UVXY is down 2.7% Monday. The ETF underwent a 1 for 4 reverse split Friday.
Investors need to keep in mind that these ETFs are designed to track CBOE Volatility Index futures contracts, not the VIX spot price. It’s a very important difference.
Volatility products are designed to “roll” the contracts over periodically to maintain exposure to VIX futures. They can lose money on this trade when longer-dated contracts are more expensive than the front-month contract, or when markets are said to be in “contango.”
iPath S&P 500 VIX Short Term Futures ETN
For more information on the CBOE Volatility Index, visit our VIX category.
Max Chen contributed to this article.