This is a leveraged volatility ETF designed to track two times the daily return of short-term VIX futures, the volatility index futures. It rises sharply when market volatility spikes, and its exposure is reset on a daily basis.

It suits active traders who want to hedge against a market selloff or make short-term bets on a volatility spike, and who are willing to accept very high risk.

It is a passive (index-tracking) ETF managed by Volatility Shares.

The fund uses derivatives to build exposure to two times the daily return of short-term VIX futures, and it resets that exposure every day. Because the VIX futures curve is usually in contango, value is eroded as contracts are rolled from one month to the next. Combined with the daily reset, this means the fund's value tends to decline quickly over the long term.

• 2x daily leverage on short-term VIX futures
• A hedging tool that responds to volatility spikes

Assets under management (AUM) stand at $214.7M, and the expense ratio is 3.37% per year.

Compared with VIXY and VXX, which offer unleveraged volatility exposure, the main points of comparison are the leverage multiple and value erosion.

Volatility products rise sharply when the market plunges and volatility spikes, but they tend to fall quickly once the market stabilizes. Contango in VIX futures and the daily reset combine to erode value faster over time, so losses are almost certain when the fund is held for the long term.

Fund flows into volatility products vary widely depending on concerns about a market selloff and hedging demand, and short-term hedging and speculative money sometimes flows in when market uncertainty rises. It is also worth noting that performance can differ greatly depending on the volatility environment and the shape of the futures curve.

The strong rebound during volatility spikes is both its strength and its risk, while value erosion from contango and the daily reset and its unsuitability for long-term holding are key considerations.

For unleveraged volatility exposure, options include VIXY and VXX, and for bets on falling volatility, inverse products such as SVXY are also worth comparing. For longer-dated VIX futures, products such as VIXM can be considered as well. The three products shown in the table, TQQQ, SSO, and SOXL, are equity index products that track the Nasdaq, the S&P 500, and the semiconductor index with leverage, so their underlying assets differ from this product, which bets on volatility. What sets this ETF apart is its structure of tracking short-term VIX futures at two times the daily return.

These are the points to review before investing in UVIX. The strong rebound during volatility spikes is attractive, but value erosion, long-term losses, and extreme volatility should be checked in advance. It is best to approach the product only after fully understanding how volatility products are structured.

Value erosion from VIX futures contango and the daily reset is the main variable in performance, and holding for the long term almost certainly leads to a large loss of value. Leverage is applied to volatility, so price swings are extremely large, and the product is not suitable for anything other than short-term hedging and trading.

It is a candidate only for ultra-high-risk traders who want to hedge against a market selloff or make short-term bets on a volatility spike. For unleveraged volatility exposure, consider products such as VIXY and VXX. If you want short-term volatility bets or hedging, it is advisable to choose this product only after fully understanding its structure and value erosion.