As volatility wanes, investors have been betting against the CBOE Volatility Index with inverse exchange traded products. However, some are beginning to hedge against a complacent market, issuing a warning on potential short-term risks.

Betting against spikes in market volatility has been a winning idea so far this year. For instance, the VelocityShares Daily Inverse VIX Short-Term ETN (NYSEArca: XIV), ProShares Short VIX Short-Term Futures ETF (NYSEArca: SVXY) and VelocityShares Daily Inverse VIX Medium Term ETN (NYSEArca: ZIV) were among six ETFs that touched all-time highs Wednesday. Year-to-date, XIV is up 6.4%, SVXY is up 6.5% and ZIV is up 9.9%.

The Chicago Board Options Exchange Volatility Index, or simply the VIX, is a gauge of implied volatility on S&P 500 index options. Essentially, the VIX strengthens when volatility increases or when equities begin tanking.

On the other hand, a short or inverse VIX strategy essentially provides investors a bet that a calm and complacent market environment will continue.

The VIX dipped 5.4% Wednesday and now hovers around 12.3, close to its lowest level since the financial crisis and 14.7% below its 200-day simple moving average. Historically, the index has sat around the 15 to 20 level.

“I am of the view that we are in a period of lower volatility and people need to reset their expectations of what high volatility really is,” Eric Augustyn, head of options strategy for Wells Fargo Private Bank, said in a Bloomberg article. “If there is a floor on the VIX, it’s 10.”

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