For now, the short or bearish volatility ETF play is back as investors bet on continued market complacency. For instance, the ProShares Short VIX Short-Term Futures ETF (NYSEArca: SVXY), which follows the inverse or -100% daily performance of VIX futures, increased 16.4% so far this year.
Speculators, including hedge-fund investors, have been cutting back on bearish VIX futures bets late last year in anticipation of heightened market volatility. In September, speculators held around 133,850 positions in net bearish VIX bets, compared to 22,800 in December. More recent data has not been available due to the extended government shutdown.
ETP traders have also been upping their bets on potential volatility ahead after the recent run up in U.S. equities. For example, VXXB experienced $455 million in net inflows year-to-date, VIXY attracted $50.3 million in new inflows and VIIX added $27.3 million, according to XTF data.
For more information on the CBOE Volatility Index, visit our VIX category.