Global financial markets have been extremely volatile since the start of this year due to a range of factors. The slowdown in China has been the most important reason for volatility. Other factors that have contributed to the volatility is uncertainty over interest rate hikes in the U.S., negative interest policy implemented by several developed world central banks and sharp pullback in commodities.
While volatility is not good news for investors, there is way to profit from it. Investors with high risk appetite can trade VIX (Volatility Index), which is a key measure of market expectations of near-term volatility conveyed by the S&P 500 stock index option prices.
Canadian investors can also consider ETFs such as the BetaPro S&P 500 VIX Short-Term Futures Bull Plus (TSX: HVU) and BetaPro S&P 500 VIX Short-Term Futures ETF (TSX: HUV) that are based on the VIX index.
HVU invests in financial instruments that have similar daily return characteristics to two times (200%) the S&P 500 VIX Short-Term Futures Index. HUV is designed to provide daily investment results that correspond to twice the daily performance of the S&P 500 VIX Short-Term Futures Index.
