It makes sense to watch Volatility linked products closely with the VIX closing above $17 heading into last weekend, and trading as high as $17.57 on an intraday basis on Friday on additional global equity concern amongst many.

Going back to the February/March timeframe, every time the VIX has popped into the $17-$18 range it was not for long, typically retreating sharply the next day.

The index itself is above both its 50 and 200 day moving averages currently for the first time since April, and even with today’s 6% retreat taken into account it has displayed some short term staying power for now at what most whom were accustomed to a $10-$12 level in the VIX may consider relatively high levels.

Not surprisingly trading volume in Volatility linked ETNs has been off the charts in recent sessions, with investors seeming to take profits in VXX ($-200 million in redemptions lately) into the recent move higher. It is important to note that because of the effects of contango, VXX (iPath S&P 500 VIX Short Term Futures ETN, Expense Ratio 0.89%) and many of the other long Vol linked ETNs in the marketplace may have moved higher in recent sessions, but in many cases not as much as the spot VIX index itself.

These limitations must be recognized and understood in order to utilize any of the Vol linked products efficiently and correctly. Despite its limitations, VXX is still a $1.2 billion fund in terms of AUM and a force to be reckoned with in terms of its average daily, and dollar volume.

On an average day VXX trades about 28 million shares but in the past few sessions with a surging VIX has regularly averaged 60-75 million shares changing hands amid some wild intraday rides. The second largest “Volatility” linked product is XIV (VelocityShares Daily Inverse VIX Short Term ETN, Expense Ratio 1.35%) which has had an impressive run since the “environment” up until now has consisted of a longer term declining VIX mired in contango, which potentially amplifies returns of those whom are “short” volatility.