Last year, traders argued that the VIX remained depressed because realized volatility in U.S. equities has diminished and economic fundamentals remain supportive. That sentiment sent traders scrambling into XIV and rival inverse volatility products. For example, XIV doubled in size in August.

“The funds had been hemorrhaging money since the equity selloff sent the VIX to its highest level in two years on Feb. 5. The price of UVXY, for example, soared as much as 71 percent that day, but then plunged by a record 33 percent in the following session,” according to Bloomberg.

The VIX, or so-called fear index, is a widely observed indicator for investor sentiment in the stock market and measures the expected or implied volatility of large-cap stock options traded on the S&P 500 index. ETPs that track VIX futures allow investors to profit during rising volatility or hedge against short-term turns. VIX exchange traded products track the VIX futures market, not the VIX spot price.

For more information on the CBOE Volatility Index, visit our VIX category.