A while back there was a post on potentially hedging with volatility indices. Here is a good read on why that is not necessarily the best idea. Just sharing in case it is useful to anyone.
http://seekingalpha.com/article/3069646-the-danger-of-vix-pr…
The VIX is a measure of the cost of protection, and can rise if the market spikes sharply higher just as much as it can when it goes down. The ETF-like derivatives of it are generaly a losing proposition for anything beyond a short term bet you hope to be lucky with.
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The VIX is a measure of the cost of protection, and can rise if the market spikes sharply higher just as much as it can when it goes down. The ETF-like derivatives of it are generaly a losing proposition for anything beyond a short term bet you hope to be lucky with.
These are ideal candidates to consider for shorting. Take a look at the chart for VXX since inception:
http://finance.yahoo.com/echarts?s=VXX+Interactive#
While there have been some spikes, over the long haul the frictional costs of buying futures to mimic the VIX destroy much more value.
Cheers,
Chris