Frequently Asked Questions

What is the difference between the VIX® Index and VIX® futures?

The VIX® Index was an index created by Cboe Global Markets and measures expectations of near-term volatility in the S&P 500® (SPX), as implied by options prices.

The VIX Index estimates future market volatility by averaging the weighted prices of SPX call and put options over a wide range of strike prices. This calculation gives the anticipated annualized change in the S&P 500 over the next 30 days. If options traders believe the S&P will be volatile in the coming 30 days, they’ll pay more for options that let them lock in future prices. The VIX Index captures those expectations.

The VIX Index is a barometer, but not a tradable instrument by itself. In 2004, Cboe Global Markets listed futures contracts on the VIX Index that trade on the Cboe Futures Exchange, which allow market participants to speculate on the future value of the VIX Index on a given date. VIX futures allow investors to make a pure play on implied volatility, which historically has exhibited inverse correlation to the S&P 500. As such, VIX futures may provide an effective hedge to broad market risk.

 

Investments in ETPs involve risk, including the possible loss of principal, and are not appropriate for all investors. Non-traditional ETPs, including leveraged and inverse ETPs, pose additional risks and can result in magnified gains or losses in an investment. Specific risks are outlined in the fund prospectus and may include concentration risk, correlation risk, counterparty risk, credit risk, market risk, interest rate risk, volatility risk, tracking error risk, among others. Investors should consult with their tax advisors to determine how the profit and loss on any particular investment strategy will be taxed. Tax laws and regulations change from time to time and may be subject to varying interpretations. The information in this program is provided for general education and information purposes only. No statement within this program should be construed as a recommendation to buy or sell a security or to provide investment advice.