The risks of VIX-tied investing

Jun 9, 2014

Trading in exchange-traded products (ETPs) ostensibly gives investors an opportunity to profit when the CBOE Volatility Market (VIX) spikes, thereby offsetting potential losses in other areas of a portfolio, but they are not suitable for buy-and-hold investors because they are virtually guaranteed to lose money over time, writes VIX creator Robert Whaley, Valere Blair Potter Professor of Finance. Whaley’s commentary is excerpted in related stories in the Wall Street Journal: VIX notches for pre-financial crisis low and Yahoo! Finance: Father of the VIX issues warning on volatility ETFs.