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Trading Volatility ETFs > Enter Tradable VIX

Enter Tradable VIX

VXX and VXZ were the first two tradable VIX ETNs to list. Both came to life on January 30, 2009 with the promise of finally allowing you to trade VIX like a stock—except no one ever promised that. And if they did, they misspoke.

That’s because VXX and VXZ don’t actually track VIX. They track VIX futures, and VIX futures do not track VIX itself on a tick-for-tick basis.

The VIX is the CBOE-created volatility index, designed to identify implied volatility. It is a single number to proxy implied volatility on a hypothetical option with a perpetual 30-days duration. VIX began in the early 90s tracking options on the S&P 100 Index, using only a few near-money strikes.

Over the course of the next decade, VIX started gaining notice about the time the tech bubble started to implode. The whole concept of “Volatility as an Asset Class” took form. Not only did people start watching VIX, they wanted a way to trade it.


  

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