The CBOE S&P 500 Volatility Index (VIX) is one heck of a volatile beast. Did I just use the word “volatile” to describe a “volatility” index? Shame on me for not being more creative with my words!
To bring you up to speed, here’s what’s happened: the recent behavior of the VIX and ETFs tracking it is giving the rollercoaster business a run for its money.
After the VIX skyrocketed a breathtaking 217% from Aug. 15 to Aug. 24, bullish VIX-linked products like the ProShares Short-Term VIX Futures ETF (VIXY) and ProShares Ultra 2x Daily VIX Short-Term Futures ETF (UVXY) followed with impressive gains of 52% and 121% respectively.
One month after the Aug. 24 stock market selloff, the VIX was still up 82% and holding. Likewise, the performance of VIXY and UVXY were both still up a sizzling 52% and 98%.
But heading into early October, the VIX suddenly remembered it was a volatlity index and decided it was time to behave in a way — true to its name “volatile” — by doing something radically unexpected: crash back to Earth.