Volatility ETF Strategy

An ETF Volatility Trading Strategy takes long or short exposure to implied volatility through exchange traded securities. A Volatility Trading Strategy is typically a relative value / countertrend strategy applied to an exchange traded fund (or derivates) that intends to get long volatility positions when implied volatility is below relative to historical volatility and short volatility positions when implied volatility is high relative to historical volatility. A Volatility Trading Strategy typically applies this strategy to Exchange Traded Funds (ETFs) or derivatives the track the VIX.

VIX is a trademarked ticker symbol for the Chicago Board Options Exchange Market Volatility Index, a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index or the fear gauge, it represents one measure of the market’s expectation of stock market volatility over the next 30-day period.

To learn more, read:

Understanding the VIX

Asymmetric VIX

Keywords: VIX, market volatitility, fear gauge, barometer of fear

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