Options Jive - September 3, 2021 - Trading Volatility ETFs Can Be a Drag

published 2 weeks ago by tastytrade, Inc.

The VIX is a measure of 30-day forward volatility in the S&P 500. In short, people trade VIX futures and options when they want to make bets on the rise or fall of overall market volatility. Volatility (Leveraged) ETFs offer another way do the same thing. They track VIX futures, therefore, in times of contango they tend to decay due to the subsequent roll from first to second month. Join Tom, Tony and Jermal as break down the concept of volatility drag and the effect it has on volatility ETFs that track the VIX.

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