The extended bouts of volatility this year has been a boon for volatility-related exchange traded funds as the CBOE Volatility Index, or so-called VIX, remained elevated for much of the year.
The CBOE Volatility index was trading around a 30.1 reading Wednesday and hovered around its historical average of a 20 reading ever since the markets tanked at the start of October. In comparison, the VIX traded below the 10 level at the end of 2018, marking 2017 as one of the least volatile years in decades.
Meanwhile, the iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX), the largest VIX-related exchange traded product, gained 76.8% year-to-date, surging 83.3% over the past three months.
The frequent bouts of market oscillations have kept traders on their toes in the volatility segment and made betting on the market’s misfortune a profitable play.
“The thing that worked in the volatility space this year is the thing that almost never works – just buy and hold volatility,” Matt Thompson, co-head of commodity trading adviser Typhon Capital Plc’s volatility group, told Reuters.