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Some traders use exchange traded products linked to CBOE Volatility Index futures to hedge against any quick downturns in the market. However, individual investors need to be careful with volatility-linked funds and understand they don't perfectly track the VIX spot price, and can be hurt by "contango" in futures markets.

The VIX, Wall Street's so-called fear index, eased back last week after shooting higher on concerns over Greece and European debt. "Thursday's close of 24.49 was above its January high," Toni Truner of TrendStar Trading Group said in an equities.com report. "It was the most volatile candle I've seen on the VIX for quite some time now. So it does appear that we are now moving at a much faster pace, and fear is definitely coming into the market as the situation in Europe is deteriorating rapidly."

The VIX has crossed its 50-day moving average and is finding resistance at its 200-day level of 25.

The CBOE Index, or a widely viewed gauge of fear in the market, moves higher as investors hedge their positions with puts. With more fear, investors pile into more puts and the VIX rises.

Investors interested in hedging a position as market fear increases on eurozone concerns or other market related problems may take a look at VIX-related ETFs like the ProShares VIX Short-Term Futures ETF (NYSEARCA:VIXY) and ProShares VIX Mid-Term Futures ETF (NYSEARCA:VIXM).

The VelocityShares Daily 2x VIX Short Term ETN (NASDAQ:TVIX) is the largest VIX-linked fund available. However, investors should note that this is a leveraged-long exchange traded note. Leveraged funds provide 2x the daily VIX exposure. Additionally, the TVIX fund has recently come under fire as its prices plunged after the issuing bank provided new shares of the ETN.

ProShares VIX Short-Term Futures ETF

Click to enlarge image.

Max Chen contributed to this article.

Source: VIX ETFs To Hedge Market Volatility