Entering text into the input field will update the search result below

VIX ETPs - What Can Go Wrong?

Apr. 05, 2022 9:31 AM ETVXX, VXZ, XVZ, VIXY, VIXM, VIIXF, UVXY, SVOL, SVXY, TVIXF8 Comments
Bill Luby profile picture
Bill Luby


  • The VIX ETPs have quite a few quirks and as a result of these quirks and their high volatility, there are considerable risks for both longs and shorts.
  • From the 30,000-foot perspective, the big risk in being short volatility is that a big one-day VIX spike can theoretically destroy the value of your entire position.
  • While the number of VIX ETNs is dwindling, ETNs have their own set of issues, as these are debt securities – essentially a promise to pay the value of the underlying index – rather than a portfolio of VIX futures, as is the case with VIX ETFs.

Wooden cubes building word ETF (abbreviation of Exchange Traded Fund) on light blue background

Nastassia Samal/iStock via Getty Images

For many years, I’ve had a tagline at the bottom of my email: “In volatility there is opportunity!” The tagline is a reminder that when things look darkest in the financial markets, this is often an area of

This article was written by

Bill Luby profile picture
Bill is Chief Investment Officer of Luby Asset Management LLC, an investment management company in Tiburon, California. He also publishes the VIX and More (http://vixandmore.blogspot.com/) blog and an investment newsletter. His research and trading interests focus on volatility, market sentiment, technical analysis, ETPs and options. Bill was previously a business strategy consultant. When not trading or blogging, he can often be found running, hiking, and kayaking in Northern California. Bill has a BA from Stanford University and an MBA from Carnegie-Mellon University. Visit Bill's blog, VIX and More (http://vixandmore.blogspot.com/)

Recommended For You

Comments (8)

k-ski profile picture
@Bill Luby
What could go wrong? You could short Vol when the Vix is at 18.50

I had to circled back to this article~ I think the habit of buying every dip/shorting vol wont die easy. I believe one day it simply wont work, who knows maybe that day is in the rear view
Augustus profile picture

Don't overload your portfolio with a short Vix position. Don't panic. Just hold for the bumpy ride to certain profit.
Augustus profile picture
I have maintained a short position on UVXY for over a year. About 2% - 3% of portfolio value to contain the problem of a spike doing some overwhelming damage. The problem is that as it declines in value the gains do not compound down and the number of shares short must be increased. I do try to add on a spike up of 50% in UVXY price. Objective is just add 2% to annual portfolio return as UVXY declines to continual reverse splits.
I don't understand how ETNs that can just decide to stop creating new shares (VXX) are allowed to exist (and to do this) when the SEC won't allow a Bitcoin ETF...
Stevlg profile picture
As always-always helpful & thanks for this article.
Would you elaborate a bit about your inversion to
UVXY. Your response appreciated.
k-ski profile picture
I see you are "net short VXX and UVXY, long SVIX"


With the Vix closing yesterday at 18.5 there is really only one direction I would bet on
Market Trends Investor profile picture
Bill, do you have any thoughts or plan to write about the recently minted ETPs. SVIX or WEIX ?? Thanks.
Bill Luby profile picture
@Market Trends Investor, thanks for the nudge. I've written a bit about SVIX, but WEIX is an interesting animal that deserves some of its own air time.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

Related Stocks

SymbolLast Price% Chg
iPath® Series B S&P 500® VIX Short-Term Futures™ ETN
iPath® Series B S&P 500® VIX Mid-Term Futures™ ETN
iPath S&P 500 Dynamic VIX ETN
ProShares VIX Short-Term Futures ETF
ProShares VIX Mid-Term Futures ETF

Related Analysis

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.