With the creation of the VIX index in 1993 and the subsequent listing of tradable futures and options in 2004 and 2006, respectively, interest in and trading volumes in VIX products have been explosive. VIX’s consistent ~80% negative correlation to SPX and the broad equity markets has prompted more strategists and traders to adopt VIX futures and other VIX-based instruments to hedge their portfolios against market downturns and/or to speculate on market turmoil. VIX instruments have become a liquid and transparent alternative to OTC variance swaps.

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