by Ian Cooper

It always pays to use protection.

After some great upside, markets are plunging again. Investors are panicking. Stocks are plummeting. All thanks to inflation and the fact the Federal Reserve may have to get far more aggressive with interest rate hikes, near-term.

So much for inflation being transitory.

Inflation is still out of control. Fears of recession are circulating. There are issues with Russia, North Korea, and China. Even the International Monetary Fund (IMF) just cut its global growth forecast for 2023, with warnings, “the worst is yet to come.”

As noted by CNBC: The IMF also highlighted that the risk of monetary, fiscal, or financial policy “mis-calibration” had “risen sharply,” while the world economy “remains historically fragile” and financial markets are “showing signs of stress.”

In short, we have a bit of a mess on our hands. 

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And the best way to trade that mess is with bets on volatility. On September 14, 2022, for example, we highlighted opportunity with these VIX-related ETFs and ETNs.

  • 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 14, the UVXY ran from about $10.35 to $13.51.
  • 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 September 14, the VXX ran from about $19 to $21.85 a share.
  • ProShares VIX Short-Term Futures ETF (VIXY) — This 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. Since September 14, the VIXY ran from about $14.75 to $17.67.

With more volatility on the way, these may continue to be some of the best bets.