The 3 Best Ways to Hedge for Wild Volatility

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Volatility could easily rocket higher with a great deal of uncertainty, we noted Sept. 17.

In fact, volatility is spiking at the moment. Aside from the debt ceiling, inflation, and the Federal Reserve, an energy price surge is now sending stocks deep into the red. As noted by CNBC, “Oil prices could experience an ‘off the charts spike’ as winter approaches and OPEC and its allies stick to their earlier pact on oil output.”

It’s also why the volatility trades we mentioned on Sept. 17 are also pushing higher, including:

ProShares Ultra VIX Short-Term Futures ETF (UVXY) 

The ETF was designed to match two times (2x) the daily performance of the S&P 500 VIX Short-Term Futures Index.  Since September 17, the UVXY ran from about $21.56 to a high of about $24.17. From here, it could run to $30 on wild bouts of market fear.

iPath S&P 500 VIX Short-Term Futures (VXX) 

The VXX ETN provides exposure to the S&P 500 VIX Short-Term Futures Index.  Since mid-September, the VXX ran from about $25.30 to $27.57.  It could also be headed to $30.

ProShares VIX Short-Term Futures ETF (VIXY)

ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration.  So far, the VIXY ran from $20.75 to $22.56.

With fear showing no signs of cooling, hedging for volatility is a smart move right now.

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